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Russia’s $186 Billion Sovereign Wealth Fund Dumps All Dollar Assets

Tyler Durden
June 4th, 2021
ZeroHedge
Comments (8)

This article was originally published by Tyler Durden at ZeroHedge. 

Following a series of corporate cyberattacks that American intelligence agencies have blamed on Russian actors, Russia’s sovereign wealth fund (officially the National Wellbeing Fund) has decided to dump all of its dollars and dollar-denominated assets in favor of those denominated in euros, yuan – or simply buying precious metals like gold, which Russia’s central bank has increasingly favored for its own reserves.

Finance Minister Anton Siluanov

Finance Minister Anton Siluanov made the announcement Thursday morning at the annual St. Petersburg International Economic Forum.

“We can make this change rather quickly, within a month,” Siluanov told reporters Thursday.

He explained that the Kremlin is moving to reduce exposure to US assets as President Biden threatens more economic sanctions against Russia following the latest ransomware attacks. The transfer will affect $119 billion in liquid assets, Bloomberg reported, but the sales will largely be executed through the Russian Central bank and its massive reserves, limiting the market impact and reducing visibility on what exactly the sovereign wealth fund will be buying.

“The central bank can make these changes to the Wellbeing Fund without resorting to market operations,” said Sofya Donets, economist at Renaissance Capital in Moscow. “This in some sense a technical thing.”

Jordan Rochester, currency strategist at Nomura International PLC, said, “This is a transfer of euros from the central bank to the wealth fund, we’ll then see the central bank the holder of the USDs and it’s up to them to manage it. No initial market impact.”

The news isn’t a complete surprise: The Bank of Russia, Russia’s central bank, has steadily reduced its dollar holdings over the last few years amid increasing sanctions pressure from the US and Europe. That trend continued through President Trump’s term.

Just a few days ago, we reported that the Russian parliament had just authorized the sovereign wealth fund to buy gold through the central bank. However, the central bank reports its holdings with a six-month lag, making it impossible to determine its current holdings.

Russia’s gold holdings eclipsed its dollar reserves last year despite a halt in gold purchases. This was partly due to an increase in the value of its gold holdings with the rise in gold prices, and partly a function of the central bank’s continued efforts to shed dollar assets.

The wealth fund currently holds 35% of its liquid assets in dollars, worth about $41.5 billion, with the same amount in euros and the rest spread across yuan, gold, yen, and pounds. After this latest change, the fund’s assets will be held 40% in euros, 30% in yuan, 20% in gold, and 5% each in yen and pounds, Siluanov said.

Source: Bloomberg

 

The wealth fund holds savings from Russia’s oil revenues above a cutoff price and is used to help offset shortfalls when the market falls below that level. Together with illiquid assets, its total value is $185.9 billion.

A few years ago, Russian President Vladimir Putin warned that Washington was inadvertently accelerating de-dollarization with its aggressive financial sanctions, which were forcing its geopolitical adversaries to reduce their dependence on the greenback. Just last month, Russia reached a new milestone whereby fewer than 50% of its exports were paid for in dollars.

It appears that after years of steadily reducing its dependence on the dollar, Russia is about to intensify those efforts in a way that Washington will be forced to take notice.

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    Author: Tyler Durden
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    Date: June 4th, 2021
    Website: https://www.zerohedge.com/

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    8 Comments...

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    1. Anonymous says:

      This does not contain a large enough amount in dollars to make any real difference, but the move does indicate something which could be very destructive to the value of the dollar if it spreads to other countries anytime soon.

      I’m sure the President and all of his advisors are aware of this and will take appropriate measures to head it off, nip it in the bud so to speak.

      Watch for the coming measures they take to take advantage of whatever economic opportunities they may present you.

    2. Well, Russia as well as China know exactly what is about to happen to America. All of the world’s principalities know that America is under deconstruction from within and will soon be removed as a world power and most likely it will be completely destroyed as eagles wings being plucked from the lion (Daniel 7:4).
      https://www.jesussaidwhat.com/revelation-6-unsealing-the-book-of-

    3. Darth Skippy says:

      While I have never heard any reliable sources on how many total dollars exist, the number is at least in the trillions.

      This is not to mention the absurdity of being in interdependence with a national competitor or wartime enemy.

    4. Anonymous says:

      Dollars, it’s what’s for dinner.

    5. Anonymous says:

      The money system is nothing but a joke. The rich think they‘ve won the game of life by the more they have. It‘s all a game to them.

    6. Andrea.Iravani. says:

      OK., but just don’t tell the algorithms about this. Everything is priced based on algorithms, rather than things that matter, like earnings and economic growth, and credit worthiness, because if stock and bond markets were priced based on things like that, they would be priced at zero.

      Andrea Iravani

    7. Frank Thoughts says:

      The Russians are smart and can see the US is heading for a crack up boom and then collapse. Printing money to hand it to blacks to buy crap from China is not a recipe for wealth creation.

      Effectively the US after World War Two took stolen Nazi science and technology to dominate the world. The problem became this genius was running out and so America turned to Asians to do the brain work. But, with the BLM capture of the US government, it means you now have “chimps with AKs” so to speak, people who lack the intelligence to handle safely Nazi science and technology.

      Give me a beautiful Russian or Asian woman any day over an obese ghetto ape.

    8. Anonymous says:

      We’re all going to be millionaires!

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