Russia’s default saga seems to be settled for the time being, with creditors reportedly now receiving scheduled Eurobond payments, but the fact that it came so close to default suggests that sanctions have vastly reduced the sovereign’s willingness to pay. In the meantime, sanctions are causing inflation to surge even further which will add to the squeeze on consumers. One glimmer of hope is that peace talks between Russia and Ukraine seem to have made some progress this week. But one thing to bear in mind is that, even if there is some diplomatic solution, Russia won’t go back to its pre-invasion situation.
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