Page 72 - RusRPTNov19

Russia gross reserves structure (in USD bn equivalent)
USD EUR CNY GBP
Mar-18 196.7 99.9 22.5 35.6
Mar-19 115 147.7 69.2 32.2 source: CBR
7.1 FX issues
On October 3rd Reuters reported that Rosneft had set the euro as the default currency for all its new export contracts.
This is just the latest step in Russia’s efforts to de-dollarize its economy and reduce its exposure to the US financial system and the reach of US sanctions.
The Bank of Russia has also further cut its holdings of US dollars: in the year to April 2019, the share of central bank foreign-exchange reserves fell from 43.7% to 23.6%, while the euro share rose from 22.2% to 30.3%, and the yuan from 5% to 14.2%.
Shifting in euros is likely to raise the transaction costs for Rosneft (apart from anything else, the majority of its $44bn net debt is in dollars).
On the other hand, as Russian First Deputy Prime Minister and Finance Minister Anton Siluanov noted last year, a range of Russian exporters are moving to trading in euros because dollar payments are increasingly being delayed as banks conduct sanctions-related checks with the US Office of Foreign Assets Control before releasing funds.
Could Rosneft’s move have wider ramifications? If, in the future, a large share of Russia’s oil exports are transacted in euros, the Ministry of Finance and the
72 RUSSIA Country Report November 2019 www.intellinews.o