Russia observes default on dollar solvency shortage… Limited direct damage to Korea
A sense of indirect influence… Beware of the potential spread of the emerging market bond market A fire broke out in an apartment building in Kiiu, Ukraine’s capital, due to a Russian bombardment, and local rescue teams are putting out the fire. 2022.03.16/news1 © Reuters = News 1 © News1 Reporter Kim Min-soo
(Seoul=News 1) Reporter Seong-Kim Kim = Tensions are rising in the domestic financial sector as the news that Russia’s military invasion of Ukraine is imminent, a declaration of default (default). It is not unexpected, and there is a forecast that the ripple effect on the international financial market will not be large, but it seems to be paying close attention to the situation as it could cause a spark as it spreads to the departure of investment funds in emerging countries.
According to Bloomberg News on the 15th (local time), Russia is expected to declare a default of 150 billion dollars (about 187.18 trillion won) in the near future.
Right now, on the 16th, it has to pay 117 million dollars (about 140 billion won) only in interest on the dollar bonds.
In the domestic and foreign financial circles, there is an observation that Russia will not be able to pay interest. After that, it is expected that the default declaration will be made after a grace period of about one month.
The view of the financial sector is that the direct damage to Korea is not expected to be large.
The possibility of default has been discussed since Western countries, including the United States, announced on the 27th of last month nuclear bomb-level economic sanctions that excluded major Russian banks from SWIFT, an international settlement network, and restricted Russia’s access to foreign exchange reserves. It’s to blame.
Koong-rak, a researcher at Daishin Securities, said that the impact on the financial market will be limited as the prospect of Russia’s default declaration has been raised steadily for over two weeks after Swift was excluded. He said the reaction was that it exploded.
However, the financial industry is not letting go of tension as it is unknown where the sparks from the default declaration will go.
Some analysts say that it is necessary to keep an eye on the impact on the bond market in emerging countries. Park Seung-jin, a researcher at Hana Financial Investment, said in the report that, from a market response point of view, it is necessary to look at whether it will spread to the bond market in emerging countries rather than the Russian default itself.
Of course, it is unlikely that a Russian default will immediately lead to a spread of credit risk, but the burden on emerging countries may increase as major advanced countries are tightening their currencies and fears of capital outflows from emerging countries are growing.
Researcher Park said, “It is an area that needs constant vigilance that anxiety may be amplified in conjunction with changes in the monetary policy of central banks in developed countries. .