Russia is trying to reduce its dependence on the dollar by cutting US securities holdings and settling more trade payments in other currencies, Moscow’s chief economic policymaker said, as he sketched out the government’s response to intensified US sanctions.
Anton Siluanov, finance minister and deputy prime minister for the economy, said the US currency was “becoming a risky instrument in international settlements”.
“We have decreased to a minimum level and will further cut our investment in the US economy, in US securities,” he added, in the most direct confirmation so far of a Russian government sell-off of US Treasuries.
According to data released by the US Treasury last month, Russia’s holdings fell from $96bn to just under $15bn in the two months up to the end of May.
Tension between Washington and Moscow increased further last week, as the US imposed new sanctions on Russia over the case of Sergei Skripal, a former Russian agent attacked with a nerve agent in the UK.
US senators are working on legislation that would put into force still tougher measures against Moscow.
Dmitry Medvedev, Russia’s prime minister, warned on Friday that moves to prevent Russian banks from using the dollar — one of the steps in the draft legislation — would be seen by Moscow as “economic war”. He added that Russia’s response might go beyond economic and financial measures.
In less dramatic language, Mr Siluanov, one of a handful of economic policy officials whose advice President Vladimir Putin generally follows, described the expanded US sanctions as “unpleasant, but not deadly”.
Speaking in an interview due to be aired on state television on Sunday night, Mr Siluanov said Russia was now settling more of its foreign trade in roubles, euro and renminbi.
“Eventually, this will negatively impact US investors. But we are not planning now any limitations such as shutting down McDonald’s,” said Mr Siluanov. “Our citizens work there.”
When he was asked if Russia could move away from settling oil trade in dollars, Mr Siluanov said that such a move was not impossible.
“Although oil is usually traded and contractual payments settled in dollars, we can set a dollar equivalent but receive payments for our supplies in euro or other freely convertible currencies and in the end even our national currency,” he said. “We cannot exclude that it might come to that.”
He did not provide further details on US securities sold by Moscow.
Russia’s central bank publishes details on the investment of its international reserves only with a six-month time lag and does not include enough detail to confirm how much exactly is held in US Treasury bonds.
However, Russian analysts believe this year’s sell-off has been the reult of a move by the central bank to diversify holdings away from the dollar.
Elvira Nabiullina, central bank governor, has said the bank wants “safe and diversified” holdings and that it considers “financial, economic, and geopolitical risks” in its investment decisions.
