December 10, 2022

Raven Tribune

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Shortly before the Putin-Biden meeting: Russia cuts US dollars from sovereign funds

Shortly before the Putin-Biden meeting
Russia cancels US dollars from sovereign wealth fund

The Russian government itself is talking about a “de-dollarisation”, and economists see a clear signal in Washington’s direction: Russia will wipe out the U.S. dollar from its national wealth fund.

Russia claims to have cut the dollar from its national wealth fund. The government is trying to “assess the Russian economy,” the Ministry of Economic Affairs said. Since May 20, the share of dollar assets in the fund has been reduced from 35 percent to zero percent. The Kremlin reacts to “economic and geopolitical trends of recent years.”

Finance Minister Anton Siluvanov has said the euro will account for 40 percent of investment funds in the future. Other currencies include the Chinese yuan at 30 percent, the British pound and the Japanese yen at 5 percent each. The remaining 20 percent is invested in gold.

“Very political” according to analyst

According to ING Bank experts, the restructuring of the fund, which was close to $ 186 billion as of May 1, will result in sales of $ 40 billion. Timothy Ash, a senior emerging market analyst at London-based Bluepe Asset Management, called the move “very political.”

Other economists saw the signal for Washington ahead of a summit between Russian President Vladimir Putin and his US envoy Joe Biden on June 16 in Geneva. The first face-to-face meeting between the two since Biden took office comes at a time of great Russian-American tension.

Russia has already gradually reduced its dollar reserves due to sanctions imposed by the West following the annexation of the Crimean peninsula in 2014. The US dollar is needed as a currency for international dollar trade, but this makes Russia more vulnerable to sanctions.

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