The US Treasury Department is taking the reports of war crimes committed by the Russian army as an opportunity to increase pressure on Moscow.

In the future, the Kremlin will no longer be able to service its foreign currency loans in dollars as easily as before.

Because the US Treasury Department has now removed an exemption that allowed American banks such as JP Morgan to forward payments from the Russian government to Western creditors.

Markus Fruehauf

Editor in Business.

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This exemption originally ran until May 25, but has now been cut after the horrific images from Ukraine.

In doing so, Washington stopped the payments of more than $600 million that Russia is supposed to make to its creditors from its foreign exchange reserves held at US banks.

"Russia must decide whether to use up the remaining valuable dollar reserves or generate new revenue -- or default," a US Treasury Department spokesman said.

If the obligations are not met, Russia faces the first default since the Russian Revolution in 1917, when the Bolsheviks refused to recognize debts from the tsarist era.

A $2 billion bond issue from Russia matured on Monday.

So far, the Kremlin has been able to service its foreign debt, even though Russia has been cut off from Western financial markets and some of its foreign exchange reserves have been frozen.

Russia has a 30-day grace period after the bond matures to redeem it in dollars.

According to information from the Bloomberg news agency, Moscow paid around three quarters of the outstanding amount in rubles.

This is possible because most of the creditors of this debt are from Russia.

Foreign exchange reserves melt

The attack on Ukraine causes foreign exchange reserves to melt.

They fell by $38.8 billion to $604.4 billion in the four weeks ended March 25, according to the latest data from the Central Bank of Russia.

According to earlier information from Finance Minister Anton Siluanov, Russia can only dispose of half of this.

The West blocks access to the rest.

Hassan Malik is preparing for uncomfortable times.

The senior analyst at US asset manager Loomis Sayles, a unit of French bank Natixis, believes that Russian President Vladimir Putin is likely to escalate the Ukraine war further.

This is associated with further growth and inflation risks for the global economy.

Malik sees a significant risk of Russian retaliation such as strategic defaults and counter-sanctions disrupting supply chains.

According to Malik, headlines about a diplomatic solution distract from the bitter reality and true intentions of Moscow.

It was unlikely that Russia would agree to a ceasefire as long as it saw the possibility