The volume of the Russian National Wealth Fund tops $183.93bn as gold overtakes dollar asset for first time

The volume of the Russian National Wealth Fund tops $183.93bn as gold overtakes dollar asset for first time
The Russian National Wealth Fund in December 2020 increased by RUB89bn ($1.21bn) to reach RUB13.546 trillion ($183.93bn) as of January 1 as the share of gold in reserves overtook dollar assets for the first time ever
By bne IntelliNews January 15, 2021

The volume of the Russian National Wealth Fund in December 2020 increased by RUB89bn ($1.21bn) to reach RUB13.546 trillion ($183.93bn) as of January 1, the Ministry of Finance said on January 13.

At the same time, the CBR stopped buying gold in 2020, as it is now comfortable with the amount in reserves, but the share of gold in Russia’s reserves has exceeded its US dollar assets for the first time as the CBR continues to dump US T-bills and other securities.

Russia’s total forex reserves totalled $593.6bn by the end of last year.

As of January 1, 2021, the volume of the National Wealth Fund liquid component amounted to 7.5% of GDP, or RUB8.659 trillion ($117.195bn). As of December 1, the volume of the National Wealth Fund amounted to RUB13.457 trillion ($182.72bn).

At the same time, $51.244bn, €44.166bn, GBP8.551bn and RUB11.628bn were deposited on separate accounts with the Bank of Russia, RUB579.698bn were placed on deposits with VEB.RF.

As much as $3bn was invested in debt obligations of foreign states, RUB254.846bn and $4.113bn were invested in securities of Russian issuers related to implementation of self-liquidating infrastructure projects, and RUB278.992bn was invested in preferred shares of credit institutions, RUB138.434bn was deposited with VTB and Gazprombank for funding of self-sustained infrastructure projects, and RUB3.072 trillion was invested in ordinary shares of Sberbank, and RUB59.517bn in the ordinary shares of Aeroflot.

At the same time, the share of US dollar shrank to 22.2% from 24.2%, while the share of the euro dropped to 29.5% from 30.6%. The regulator also decreased its holdings of Chinese yuan to 12.2% from 13.2%.

According to the statistics, which are commonly published with a six-month lag, the value of gold in the country’s forex reserves is higher than the value of the US dollar for the first time ever.

In monetary terms, holdings of the precious metal totalled a reported $128.5bn against $124.6bn denominated in US currency.

The central bank began a policy of aggressively buying gold in 2007, which accelerated in recent years. But that policy has now been abandoned.

The Central Bank of Russia (CBR) had been increasing its euro and yuan holdings since March 2018, when Washington introduced sanctions against Russian individuals, causing the central bank to wind down its exposure to dollar assets in case they were next. The regulator decreased its share of these assets from $100bn in 2018 to just $3.8bn in March 2020.

The country’s monetary regulator stopped purchasing gold in April 2020, with the holdings of the precious metal remaining at 73.9mn ounces. However, global prices for gold have seen a massive growth of nearly 25% over the past 10 years, inevitably boosting the price of Russia’s vast holdings.

Dismiss