Gold replaces US dollar in Russia's international reserves

Gold has outstripped the US dollar in value as part of Russia's international reserves for the first time in history, the Central Bank of Russia said. This became possible due to the rise in the price of gold in 2020.

On January 11, 2021, the Central Bank of Russia published a report about the management of gold and foreign exchange assets. The published report reflects the structure of the portfolio of the Central Bank as of mid-2020.

As of June 30, 2020, the Central Bank placed 22.9 percent of its assets in gold. In monetary terms, this amounts to $128.5 billion of the total $561.1 billion. As much as 22.2 percent of assets ($124.6 billion) were nominated in US dollars.

Compared to the previous review, which reflected the period as of the end of March 2020, the share of gold in the Russian reserves increased from 20.8 to 22.9 percent, while the share of the dollar fell from 23.7 to 22.2 percent.

Before March 2018, the Bank of Russia was keeping 43-48 percent of its assets in dollars. Afterwards, the bank switched to euros and yuan as the USA was tightening sanctions against Russian individuals.

In early 2018, Russia owned US government bonds worth about $100 billion. As of the end of October 2020 (the latest available data from the US Treasury), the number declined dramatically to  $6 billion.

The Bank of Russia was increasing the share of gold in its reserves too.

In 2016-2018, it fluctuated in the range of 15-17 percent, and in December 2020, it amounted to almost 23 percent ($133.7 billion).

Interestingly, the Bank of Russia has not purchased any gold since April 2020: its reserves remain at the level of 73.9 million troy ounces, but their value during this period increased by 12 percent ($13.8 billion), due to an increase in world prices on gold. In 2020, gold prices increased by almost 25 percent.

The euro takes the largest share in foreign exchange assets of the Bank of Russia: 29.5 percent, or $ 65.5 billion, as of mid-2020.

The Chinese yuan accounts for 12.2 percent of gold and foreign exchange assets (the share did not change compared to March 2020).

The British pound and the Japanese yen amount to 5.9 and 3.9 percent of the Central Bank assets, respectively.