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Russia’s losses from de-dollarization amounted to nearly $8 billion

Потери России от дедолларизации составили почти $8 млрд

Russia has received less approximately $7.7 billion in the first year of the “experiment” of Russian President Vladimir Putin to reduce the share of dollar in foreign exchange reserves, estimated Bloomberg.

Against the backdrop of sanctions, the Russian Central Bank began to shift in the “weak” currencies like the Euro and the yuan, “miss” the strengthening of the dollar by 6.5%, according to RBC.

As suggested by the Deputy chief economist of the Institute of international Finance Elina Ribakova, “is the economic cost of the solution of geopolitical problems”.

However, the expert said, “while it is hard to judge, was it worth it”. “This year was a loss, but it is a long-term investment,” — said Rybakov.

In this part of the loss on assets in the yuan and the Euro Russia compensate for increasing gold reserves, — currently, this “precious metal” accounts for the largest share in Russian reserves since 2000.

The Director of the Department of monetary policy of the Central Bank of the Russian Federation Alexey Zabotkin warned that the complete removal of the dollar from gold and foreign currency (international) reserves of Russia poses excessive risks of investing in this currency is needed in case of shocks. He stated this at a meeting of the state Duma Committee on financial market.

As pointed out by Zabotkin, “foreign exchange reserves may be needed in a bad situation when we will have the sharp deterioration of the balance of payments income budget, then it will be necessary to pay these obligations at the expense of that in the budget, for example, will be transferred at the expense of funds of the NWF (national welfare Fund — ed.)”. “In this case, part of these commitments, it is better that they were against the assets in dollars”, — considers the Director of the Department of the Central Bank.

In his view, “completely abandon the dollar in foreign exchange reserves is probably wrong.”

In the II quarter of 2018, the regulator has increased its share of foreign exchange reserve assets denominated in Chinese yuan, to 14.7% from 5%, in Euro — up to 32% from 22.2%, while reducing the share of assets in US dollars to 21.9% from 43.7%.

Recall that Russia periodically “POPs” the theme of de-dollarization of the economy, and the country is gradually moving to national currencies in trade settlements with other States. However, this process is hampered by the global historical role of the US dollar as the most liquid currencies with a highly developed system of correspondent accounts.

In late July, the Director of the Department of Finance to monitor external constraints Dmitry Timofeev told RBC that the widespread use of the dollar in international payments allow the United States to intervene in the economic relations of third countries. Moreover, according to the official, the broader use of national currencies supported by the European Union and China.

At the same time, Timofeyev admitted that the care of the dollar will not be quick — it requires restructuring of the entire global financial system.

Among the problems he sees foreign exchange market: liquidity, for example, the pair ruble/yuan is now very low. In addition, he pointed out, “almost everywhere in the world to convert from one national currency to another, as a rule, goes through the dollar “leg””.

However, in early October, Russian President Vladimir Putin, speaking at the plenary session of the forum “Russian energy week”, said that confidence in the dollar drops worldwide. According to him, attempts by the US to use the dollar as a political weapon is a big mistake.

Putin gave the figures: global payments in dollars fell from 50% to 44%. In Russia 72% of settlements with partners in the EEU carries out in roubles, the President added.

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