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bne November 2019 Companies & Markets I 19
bne:FX
Russia lost $7.7bn on dumping US dollar from reserves
IntelliNews Pro
Russia has lost $7.7bn of unrealised returns as it was cutting US dollars from its Fx/gold reserves, Bloomberg estimated on October 14.
The Central Bank of Russia has cut its reserves in US dollars from 43.7% to 23.6% from March 2018 to March 2019, while increasing the share of euros from 22% to 30% and the share of yuan from 5% to 14%, making it the largest holder
of CHY in the world.
In the meantime, the US dollar would bring a return equivalent of $7.7bn over the period, according to Bloomberg estimates.
The analysts surveyed by Vedomosti daily remind that cutting US assets from the Fx/gold reserves was a sanction-driven geopolitical decision that will only play out in the long-term.
As reported by bne IntelliNews, at over $530bn Russia’s interna- tional reserves are now well beyond the $500bn informal target that the CBR had set itself as a comfortable reserve level. Reserves have been rising steadily all year and increased again from $495bn at the end of May, or about 13 months of import cover.
Amid almost complete sale of its US Treasury bond portfolio, in 2018, Russia also bought 274.3 tonnes of gold. The total amount of Russia’s gold reserve exceeded 2,168 tonnes as of May 2019.
Russia, Turkey sign deal to use own currencies in payments and settlements
bne IntelliNews
Russian Finance Minister Anton Siluanov has inked an agreement with Turkey on using national currencies in payments and settlements between the two countries, the Russian finance ministry said on October 9.
Russia, Turkey and Iran have been very active of late in taking steps to replace the dollar in transactions wherever possible, with the strategy seen as reducing potential exposure to US sanctions and global financial and economic policy as set by Washington.
The aim of the new agreement, signed on October 4, is
a gradual switchover to using the ruble (RUB) and Turkish lira (TRY) in mutual settlements, the finance ministry said.
The agreement envisages connecting Turkish banks and companies to the Russian version of the Swift payment system. It also foresees an enhancing of infrastructure in Turkey that would enable the use of the Russian MIR
cards. They were designed by Moscow as an alternative to MasterCard and Visa.
Economics editor at RBC Ivan Tkachev said that in 2018
21% of Russia-Turkey trade was settled in rubles and 65% in dollars, and observed on Twitter: “Interesting that TRY’s share in Russia-Turkey trade was only ~1% in 2018, so it’s mainly about switching to RUB. 83% of bilateral trade is Russian exports, so it’s rather about Russia getting its own Rubles for goods sent to Turkey.”
He noted that the initial news on the agreement being prepared was accidentally leaked via a document found dumped in
a landfill. It was, he added, only the second such agreement for Russia following a June memorandum with China.
Global chief economist at Renaissance Capital, Charlie Robertson, said the volatility of the lira meant that the ruble might be preferred in Turkey-Russia trade.
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