Russia sold $5 billion of US currency from its oil fund in May as part of a drive to reduce exposure to the greenback in its currency reserves and make the country less vulnerable to Western sanctions, the Finance Ministry said.
According to its statement, Russia’s National Welfare Fund (which holds savings from Russia’s oil revenues) converted $4 billion into yuan and $1 billion into euros. The ministry said last week that it would eliminate all greenback exposure in the fund, which leaves $35 billion in dollar holdings still to cut.
“This may have been driven by a desire to achieve a PR effect just before the upcoming Biden-Putin summit,” Ivan Tchakarov, an economist at Citigroup in Moscow, told Bloomberg. “It may, however, also be a transitory step toward a real restructuring of the currency reserves down the road, which, if it happens, must be done on-market.”
Russian President Vladimir Putin said at the recent St. Petersburg Economic Forum that while Moscow doesn’t want to stop using the dollar completely, sanctions have forced the country to look for alternative payment methods.
De-dollarization has been Russia’s long-term policy for many years, with a focus on relying less on the world’s most popular reserve currency. Last year, it was revealed that the first quarter of 2020 saw the share of the US dollar in trade between Beijing and Moscow fall below 50% for the first time. Just four years prior, this figure accounted for over 90% of their bilateral currency settlements.