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Treasury bars Russia payments in dollars from US accounts

WASHINGTON (AP) – The Treasury Department is moving to keep the Russian government from making debt payments at United States (US) banks with US dollars, restricting one of the strategies President Vladimir Putin is using to stave off default, an agency official said on Tuesday.

Russia faces several April deadlines to make debt payments. The Kremlin must now choose between draining its remaining valuable dollar reserves, using new revenue coming in or default, said the official, who spoke on the condition of anonymity because the official wasn’t authorised to speak on the record.

The Treasury decision comes after the agency previously said sanctions levied on Russia over its invasion of Ukraine still permit Russia to continue to make debt payments. The debt is owed to foreign investors, among others, and comes from government investments to presumably spur economic growth in Russia.

Russia is currently facing skyrocketing inflation, shortages in essential goods and disrupted trade with the rest of the world as it continues its invasion of Ukraine.

While the ruble has bounced back from the fall it took after the US and European allies moved to bury the Russian economy, Putin has resorted to extreme financial measures to blunt the West’s penalties and inflate his currency.

People walk past a currency exchange office screen displaying the exchange rates of US Dollar and Euro to Russian Rubles in Moscow. PHOTO: AP