Russia To Cut its Dependence on the Dollar

In the blog on 4 February we noted that Russia had divested itself of unprecedented quantities of gold, which has inevitably meant large accretions of dollars to its reserves. This seemed to indicate that Russia has a touching faith in the enduring value of America’s fiat currency that might well be tested by the massive rise in inflation as steeply rising commodity prices overshadow a diminution in the real purchasing power of the dollar.

But now in retaliation against talk of further economic sanctions from the United States, we are told by the Sergei Ryabkov, Deputy Foreign Minister at Smolenskaya overseeing relations with the US, that although the Foreign Ministry really has no say in the matter, Russia will henceforth “urgently” need to minimise its holdings and use of the dollar.

Has the Kremlin’s left hand any idea what the right hand is doing?

The Russian Ministry of Finance has since announced that it is diversifying away from the dollar and the euro, both from 45% to 35%, by adding in the Yen (5%) and the Chinese Yuan (15%). This is not a massive change and, as Nezavisimaya gazeta points out, “for the time being for both the man in the street and the businessman it is too soon to say goodbye to the dollar.”

This would be sensible given the dollar’s future decline anyway. The Foreign Ministry just wanted an opportunity to obtain some political advantage from the inevitable.

See Rossiiskaya gazeta:

24.02.2021 20:58Рубрика: Власть

МИД заявил о необходимости устранить зависимость РФ от “ядовитого” доллара

Текст: Диана Ковалева

Nezavisimaya gazeta:

25.02.2021 20:08:00

Российские стратегические резервы все больше зависят от Китая

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Рядовым гражданам и бизнесу, однако, пока рано прощаться с долларом

Анастасия Башкатова
Заместитель заведующего отделом экономики “Независимой газеты”