Shortly before the Putin-Biden meeting: Russia cuts US dollars from sovereign funds

Shortly before the Putin-Biden meeting: Russia cuts US dollars from sovereign funds

Shortly before the Putin-Biden meeting

Russia cancels US dollars from sovereign wealth funds

The Russian government itself speaks of a “de-dollarization”, economists see a clear signal in the direction of Washington in the decision: Russia will erase the US dollar from its national wealth fund.

Russia claims to have cut the dollar from its national wealth fund. The government is striving to “de-dollarize the Russian economy,” said the Ministry of Economic Affairs. Since May 20, the share of dollar assets in the fund has therefore been reduced from 35 percent to zero percent. The Kremlin is reacting to “macroeconomic and geopolitical trends of recent years”.

According to Finance Minister Anton Siluanov, the euro will make up 40 percent of the investment fund in the future. Other currencies included are the Chinese yuan with 30 percent, the British pound and the Japanese yen with five percent each. The remaining 20 percent of the fund is invested in gold.

Step “very political” according to analyst

According to experts at ING Bank, the restructuring of the fund, which was worth almost $ 186 billion as of May 1, will result in sales of $ 40 billion. Timothy Ash, senior emerging market analyst at London-based BlueBay Asset Management, called the move “very political”: “The message is: ‘We don’t need the US, we don’t need to trade in dollars and we are invulnerable to further US sanctions . ‘”

Other economists saw the move as a signal to Washington ahead of the summit meeting between Russian President Vladimir Putin and his US counterpart Joe Biden on June 16 in Geneva. The first face-to-face meeting of the two since Biden took office comes at a time of great Russian-American tension.

Due to the sanctions imposed by the West following the annexation of the Crimean Peninsula in 2014, Russia had already gradually reduced the proportion of its dollar holdings. The US dollar is essential as a currency for international trade, but it also makes Russia more vulnerable to sanctions.

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Author: Killian Jones
Graduated From Princeton University.He has been at the USTV since 2017.
Function: Chief-Editor

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