In March 2022, Moody's Investors Service, one of the Big Three global credit rating agencies, downgraded Russia's long-term government debt from Baa3 to B3, which is junk or non-investment grade status, due to sanctions placed on Russia for its invasion of Ukraine.

Question

Assume the Russian Federation's Central Bank is capable of evading all banking restrictions. Explain how they will mitigate the consequences of the credit rating on exchange rates while maintaining the same level of money supply.

Answer rating: 100% (QA)

ANSWER Exchange rate risk cannot be avoided altogether when investing overseas but it can be mitigat... View the full answer