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19 Jun, 2018 14:17

Russia dumped US treasuries to keep reserves safe – central bank

Russia dumped US treasuries to keep reserves safe – central bank

The Central Bank of Russia (CBR) commonly factors in all kinds of risks when allocating the country's reserves, said the CBR chief, commenting on a major sell-off of US Treasury bonds.

“We pursue the policy of safe and diversified holdings,” CBR Governor Elvira Nabiullina said while answering questions before Russia's lower house of parliament. “We assess financial, economic and geopolitical risks while allocating the country’s financial reserves.”

The comments came shortly after the latest statistics showed that in April, CBR dumped some $47bn-worth of US securities, accounting for nearly half of Russia’s overall holdings. The step moved Russia six places down to 22nd place on the list of major foreign holders of US debt. Nabiullina refused to say what the central bank did since April.

“We reveal the information about investments with a time lag of around six months. That’s the Central Bank’s policy.” she said. “We do not disclose the most recent information, as we are the biggest holder of Russia’s reserves. When we publish the data, the entire new structure will be clearly seen.”

A treasury bond is a fixed-interest government debt security with a maturity of more than 10 years. Treasury bonds make interest payments twice a year. The gradual sell-off of US sovereign debt started in 2011, and has intensified over recent years with numerous rounds of sanctions imposed by Washington against Moscow. So far, Russia has slashed its holding by more than two-thirds, from over $150 billion to less than $50 billion.

Global geopolitical tensions have forced some other countries to cut their deposits. Turkey, which started repatriating its gold from the US, nearly halved its US Treasury holdings from almost $62 billion in November to $38.2 billion in April. Norway has reduced its share by 40 percent since September 2017, from $64.1 billion to $39.3 billion in April.

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