The Central Bank does not plan to further expand the variety of foreign exchange reserves
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The Bank of Russia does not plan to further diversify international foreign exchange reserves, which now mostly consist of yuan, despite the depreciation of the Chinese currency against the dollar, said Elvira Nabiullina, head of the Central Bank.
“If you invest reserves in non-reserve currencies, they will cease to be reserves – these are non-reserve currencies, even if they are the currencies of friendly countries. We don’t have a plan for diversification,” Ms. Nabiullina said during a press conference.
Reserve currencies traditionally include the US dollar, euro, Japanese yen and pound sterling. They also sometimes include the Chinese yuan, Swiss franc, Canadian dollar and Australian dollar.
The head of the Bank of Russia, in connection with the depreciation of the Chinese yuan against the US dollar, noted that even before, when the basket of gold and foreign exchange reserves was more diverse, fluctuations in the prices of certain currencies still constantly occurred.
According to Ms. Nabiullina, the presence of yuan in reserves makes it possible to ensure financial stability if necessary. The economy and trade settlements have largely switched to the yuan, so there is demand for the Chinese currency, which allows for foreign exchange interventions in the foreign exchange market, she added.
After the entry of Russian troops into Ukraine, the United States and EU countries froze the gold and foreign exchange reserves of the Russian Federation in dollars and euros. As the Russian Ministry of Finance reported, Russia has lost access to $300 billion in reserves. In this case, the Central Bank’s reserves in Chinese yuan were not subject to freezing. As of September 1, 2023, the volume of reserves amounted to $581 billion, of which $408 billion in foreign currency.
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