Russian international gold and foreign currency reserves rose to a record high of $618.1 billion as of September 1, according to monthly data published by the Central Bank of Russia (CBR). The amount increased by 2.9% or $17.1 billion, since August 1.
The previous all-time high of $615.6 billion was recorded on Aug.27, CBR said.
The state’s international reserves are highly liquid foreign assets comprising stocks of monetary gold, foreign currencies and Special Drawing Rights (SDR) assets, which are at the disposal of the CBR and the government.
The holdings exceeded CBR Governor Elvira Nabiullina’s “comfort level” of $500 billion — a mark that was set in 2019- and have remained above that threshold ever since.
Russia has been boosting its international reserves for five years running, after they fell to a post-2008 low of $356 billion in April 2015 when the Kremlin spent some $250 billion bailing out the economy during the 2014 oil price crisis after OPEC collapsed the price of the commodity in an effort to destroy US shale production.
In 2019 growth totaled nearly $86 billion, while 2018 and 2017 saw increases of around $33 billion and $55 billion respectively.
Last year, Russia’s reserves surged by over $40 billion despite the impact of the coronavirus crisis on the country’s economy, which forced the government to increase spending to support businesses and households.
The country meanwhile has also been reshaping its international holdings, cutting the share of the US dollar in favor of other currencies and gold- a commodity that tends to increase in value during times of uncertainty.
Russia has eliminated the US currency from its $186 billion National Wealth Fund (NWF), replacing it with euros, Chinese yuan and gold.
The Ministry of Finance indicated that the Chinese currency and the Euro are seen as an alternative to the dollar “as the currencies of Russia’s leading foreign economic partners,” while gold is viewed as “an asset capable of protecting the NWF’s investments from inflationary risks.”
NWF accumulates Russia’s oil revenue and was initially designed to support the pension system. It forms part of Russia’s gold and forex reserves.
“This process of dedollarisation is taking place not only in our country, but in many countries around the world that have started to have concerns about the reliability of the world’s reserve currency,” Reuters had quoted Kremlin spokesman Dmitry Peskov as saying.
The ministry’s action mirrors a similar move made recently by CBR to reduce assets held in US currency.