Page 69 - RusRPTJun21

The latest reduction is the tail end of a long process of winding down Russia’s exposure to US federal bonds: a decade ago Russia held over $170bn in US assets, reports RT.
The sell-off began in 2014, following the imposition of harsh anti-Russian sanctions by Washington but has become more energetic as Moscow has actively been pursuing a policy of de-dollarization since about 2018, when Moscow halved its exposure to US T-bills and used the money to buy gold instead.
Among the many initiatives Moscow has started settling its international trade deals with close partners like China in national currencies rather than the traditional dollars. The process still has a long way to run, but it has been gathering momentum as other counties sign up to the schemes.
The impact on the US bond market is already noticeable. A recent report by the Institute of International Finance (IIF) showed that the foreign purchases of US T bills has dropped off to historical lows since 2015 and the bulk of the up take of new issues has been shared evenly by the US Federal Reserve bank and US based pension funds since then with almost no foreign participation.
However, foreign investors, and especially governments, continue to hold trillions of dollars of these assets as part of their international foreign exchange reserves.
Last year, it was revealed that the first quarter of 2020 saw the share of the dollar in trade between Beijing and Moscow fall below 50% for the first time. Just four years prior, this figure accounted for over 90% of their bilateral currency settlements.
In February, Moscow changed the structure of its national wealth fund, adding yuan and yen, and by dropping the share of dollars and euros to just 35% each. The fund also holds British pounds.
That same month, Deputy Foreign Minister Sergey Ryabkov told the Bloomberg business news network the greenback was “poisonous,” and Russia would be best served by reducing dependence on the US currency.
“We need to barricade ourselves against the US financial and economic system to eliminate dependence on this toxic source of permanent hostile actions,” he said. “We need to cut back the role of the dollar in any operations.”
69 RUSSIA Country Report June 2021 www.intellinews.com