Sunday, 28 May, 2023

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Russia reveals its gold stash after it adds 1 million ounces

Business Desk | banglanews24.com
Update: 2023-03-26 13:12:54
Russia reveals its gold stash after it adds 1 million ounces [image collected]

Russia bought one million ounces (31 tonnes) of gold after its invasion of Ukraine.

Following a pause in reporting, Russia shed some light on how much gold it purchased over the past year.

As of March 2023, Russia's central bank holds 74.9 million ounces of gold worth $135.6 billion. This is one million ounces more than the 73.9 million ounces reported in February 2022 - the last disclosure before the introduction of Western sanctions against Russia.

Russia's recent gold buying is considerably less than China's purchases. During the same one-year period, the People's Bank of China bought over 100 tonnes of gold.

Yet, Russia's 31 tonnes is still impressive, given that some analysts debated whether the country would be forced to sell some of its gold to cover its growing budget deficit.

Gold buying is an ongoing trend, with central banks worldwide buying the most gold on record in 2022, purchasing 1,136 tonnes, according to the World Gold Council.

In the spring of 2020, Russia briefly suspended its official gold purchases, citing strong domestic demand. Since then, purchases have resumed but at more moderate levels.

Looking at the overall changes in Russia's reserves between February 2022 and March 2023, total volume fell 8.9% to $574.247 billion. Total currency reserves decreased 11.9% to $438.683 billion, and gold reserves rose 2.5% to $135.564 billion. The share of gold in reserves rose to 23.6% from the 21% reported a year ago, the country's central bank said.

The increase in the proportion of gold reserves is in line with the impact of Western sanctions, which limit Russia's ability to manage its foreign currency exchange reserves. Russia has also boosted its exposure to the Chinese yuan over the past year.

This week, Russia's central bank also announced new measures that make it more expensive for local commercial banks to hold liabilities in "unfriendly" currencies. This was done by increasing the reserve requirement for "unfriendly" currencies to 7.5% while cutting it for others to 5.5%.

"The Bank of Russia introduces differentiated required reserve ratios for liabilities in unfriendly states' currencies," the Bank said. "The goal of this is "to promote changes in the composition of credit institutions' foreign currency liabilities towards a higher proportion of friendly states' currencies, while maintaining the conditions for a further overall decrease in the share of foreign currencies on banks' balance sheets."

The rule comes into force on April 1, 2023.

Also, during Chinese leader Xi Jinping's visit to Moscow this week, Russian President Vladimir Putin said that he supports the use of the Chinese yuan to settle trade between Russia, Asia, Africa, and Latin America.

"Already two-thirds of the trade turnover between our countries is carried out in rubles and yuan. We are for the use of Chinese yuan in settlements between Russia and the countries of Asia, Africa, and Latin America," he said during a joint statement this week.

Source: kitco.com

BDST: 1311 HRS, MAR 26, 2023
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