When FX reserve is politicized

ON March 16, Russia made a $117-million coupon payment on two sovereign Eurobonds. The move averted the first default of external Russian sovereign bonds since 1918 during the Bolshevik Revolution. The near default is unimaginable when one looks at the fundamentals of the Russian economy. The country runs a current account surplus of $120 billion in 2021, outstanding foreign currency debt is only $40 billion, and it holds $643 billion foreign exchange (FX) reserve at the end of February 2022, the fourth largest in the world.