Russia sells oil fund dollars over disputes with US

Russia announced that it would withdraw the dollar from its oil fund to reduce the White House’s vulnerability to sanctions just two weeks after the president, Vladimir Putin, organize your first summit with US leader Joe Biden. The National Welfare Fund will change its dollar holdings to euros, yuan and gold, said Finance Minister Anton Siluanov.

The dollar slashed its gains on Thursday’s news before rebounding when analysts said the immediate impact on the market will likely be limited. The transfer will take place in the huge reserves of the Central Bank. They affect about $ 119 billion in liquid assets, of which about a third is held in dollars.

“The Central Bank can make these changes to the Social Protection Fund without resorting to market operations,” said Sofya Donets, economist at Renaissance Capital in Moscow.

Ahead of the meeting between Biden and Putin on June 16, the move marks a new step in the Russian leader’s efforts to reduce his country’s dependence on the dollar., after years of increasing restrictions by the United States.

The central bank has no plans to resume gold purchases following the change in equity funds, said a person familiar with the matter, who requested anonymity because the issues are not public.

“Coming from Russia, it’s largely symbolic,” said Elina Ribakova, deputy chief economist at the Washington International Institute of Finance. “If there was a problem with the big holders of US dollars, it would be different.”

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The Russian equity fund currently holds 35% of its cash in dollars, worth around $ 41.5 billion. It has the same amount in euros and the rest is divided between the yuan, gold, yen and pound.

“This move makes sense in the context of the stubborn stalemate with the United States,” said Oleg Vyugin, a former senior central bank official. “But in terms of risk / return, it is more likely that it is economically unattractive to take out dollar-denominated assets and replace them with those they list.”

After the change, the fund’s assets will remain at 40% in euros, 30% in yuan, 20% in gold, 5% in yen and 5% in pounds, Siluanov said. The finance ministry noted Thursday evening that regulations were amended last month to reflect the new ratios, adding that it would release them when actual holdings were changed.