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Russia’s Gold And Foreign Currency Holdings Reach All-Time High

John Galt

Updated: March 1, 2022

russian gold standard
Editor’s Note:

EDITOR'S NOTE: In the weeks leading up to Russia’s invasion of Ukraine, President Biden’s warning of potentially devastating sanctions didn’t seem to make much of an impression on anyone; not the West, and certainly, not on Russia's Putin, its main target. And why not? The US has been levying sanctions against Russia since the Obama years. The net impact of such “punishing” economic actions “seems” to be little more than zilch, at least in terms of deterrence. How did Russia evade the full exposure of the sanctions’ damaging effects? He lightened the country’s dollar holdings and loaded up on gold, SDRs, and other foreign currencies. According to the article below, Russia’s gold and foreign currency holdings surged by $3.6 billion in just the last week; their total reserves totaling $643.2 billion. Another article we curated this week held the central thesis that gold is a perfect hedge against monetary risk during times of geopolitical crisis. Although the focus of that article was geared toward investors, it goes without saying that it also applies to nations involved in a conflict, be it defenders, or aggressors. It’s a principle with which Putin is obviously very well acquainted; a “theory” that he’s put into action. And as the ruble sinks to all-time lows against the dollar, his gold holdings effectively preserve the portion of capital he’s hedged.

Moscow is boosting its international holdings as a hedge against sanctions risk.

Russia’s gold and foreign currency holdings have reached an all-time high of $643.2 billion as of February 18, according to the latest data published by the country’s central bank on Thursday. Reserves have surged $3.6 billion from the previous week, the regulator said, noting that the 0.6% rise was due to a positive market revaluation. 

Russia’s international reserves, which are highly liquid foreign assets held by the Bank of Russia and the country’s government, consist of foreign currency funds, special drawing rights in the International Monetary Fund (IMF), and monetary gold.

In 2021, the nation’s forex reserves surged almost 6%.The Central Bank has a $500 billion target level for international reserves. Russia first surpassed this threshold back in 2008 with $598 billion. In the following years, reserves plunged on several occasions – including to as low as $356 billion in 2015 following the 2014 oil price crisis – but have nearly doubled since then.

In recent years, the Russian government and central bank have reduced the country’s exposure to the US dollar, reshaping its international holdings in favor of other currencies and gold. International rating agencies have previously said that Russia’s financial reserves will allow the country to cope with the negative effects of sanctions.

Originally posted on RT.

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