World Economy

Russia Speeding Up Dollar Dumping

Russia has been seeking ways of decreasing dependence  on the US currency.Russia has been seeking ways of decreasing dependence  on the US currency.

One of Russia’s largest banks, VTB is seeking to decrease the share of US dollar transactions at home as locals are choosing the Russian ruble over the greenback.

“Since the beginning of this year, people seem to be less interested in making dollar deposits or taking out dollar loans, compared to ruble-denominated deposits and loans. We believe this to be an important step towards the de-dollarization of the Russian finance sector,” said VTB head Andrey Kostin at a Kremlin meeting with President Vladimir Putin, Tass reported.

According to Kostin, VTB experts have drafted a package of proposals designed to further promote the ruble in international settlements. “I think that we need to create our own financial tools. This would serve as an additional safeguard for the Russian financial sector against external shocks, and would give a new impetus to its development,” Kostin added. The financial tools Kostin mentioned are floating eurobonds, shares and other derivatives that are now used only in the West.

Russia has been seeking ways of decreasing dependence on US currency after Washington and its allies imposed sanctions against Moscow in 2014. In May, Putin said Russia can no longer trust the US dollar-dominated financial system since America is imposing unilateral sanctions and violates World Trade Organization rules. Putin added that the dollar monopoly is unsafe and dangerous for the global economy.

Meanwhile, Russia has held a major selloff of US treasury bonds, dumping some $47 billion-worth of papers and momentarily dropping six places on a list of major foreign holders of US securities, released statistics for April have shown.

In just one month, Russia proceeded to sell $47.4 billion out of the $96.1 billion the country had in US treasury bonds in March. The latest statistics released by the US Treasury Department showed that, in April, Russia had only $48.7 billion in American assets, occupying 22nd place on the list of “major foreign holders of treasury securities.”

China, which holds the most US Treasury bonds, also sold off some seven billion-worth of its American assets, from March to April, and now has $1.18 trillion invested in securities.

Japan, which is positioned second on the list, in the same timeframe sold off some $12 billion, leaving just over a trillion dollars in US coffers. Ireland, which had $300.4 billion in April also managed to ditch over $17 billion in US assets.

A treasury bond is a fixed-interest government debt security with a maturity of more than 10 years. Treasury bonds make interest payments two times a year.

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