Russia announces it will withdraw dollar assets from its heritage fund
Russia is cutting the US dollar from its National Wealth Fund by $ 186 billion as Washington continues to impose sanctions on Moscow.
The decision was announced Thursday at the St. Petersburg International Economic Forum by Finance Minister Anton Siluanov. “Like the central bank, we have decided to reduce the NWF’s investment in dollar assets,” he told reporters, according to a Reuters translation, adding that the NWF will invest in euro assets instead, in Chinese yuan and in gold.
Changes to the NWF are expected to occur within the next month. When completed, the share of Euro assets in the fund is expected to be 40%, the yuan at 30% and gold at 20%. Meanwhile, the Japanese yen and the British pound are likely to account for 5% each.
Timothy Ash, senior sovereign emerging markets strategist at BlueBay Asset Manager, called the move to ditch US dollar assets “very political” and intended to “send a signal” to President Joe Biden’s administration ahead of the next one. summit with President Vladimir Putin. .
“The message is’ we don’t need the United States, we don’t need to deal in dollars and we are invulnerable to further US sanctions,” he said in a research note after the ‘announcement, adding that this could be interpreted as a sign that Moscow is waiting for more sanctions from the United States
The Biden administration imposed a series of new sanctions on Moscow in April for alleged interference in the 2020 election, a colossal cyberattack on the US government and corporate networks, the illegal annexation and occupation of Crimea and human rights violations. The Russian government denies all the allegations.
Backed by the money Russia makes from oil, the NWF was originally designed to support the country’s pension system. It is part of Russia’s gold and foreign exchange reserves which totaled $ 600.9 billion as of May 27, according to Reuters.
Elsewhere, Russia’s central bank governor Elvira Nabiullina told CNBC’s Hadley Gamble in an exclusive interview earlier this week that digital currencies will be the future of financial systems. “I think this is the future of our financial system because it correlates with this development of the digital economy,” she said.
This could be a concern for the United States, according to former US Treasury official Michael Greenwald.
“What alarms me is that Russia, China and Iran are each creating central bank digital currencies to function outside the dollar and other countries are following them,” he said. Wednesday at CNBC’s Hadley Gamble. “It would be alarming.”
– Additional reporting by Natasha Turak, Abigail Ng and Amanda Macias of CNBC.