January 26, 2021, 7:37

Russia Poised to Become Fourth Biggest Reserve Holder Unseating Saudi Arabia – Report

Russia Poised to Become Fourth Biggest Reserve Holder Unseating Saudi Arabia – Report

Russia has been ditching dollar-denominated assets for over a year and a half amid ongoing sanctions pressure from Washington. It also has been piling up gold reserves, which reportedly soared in value due to a trade war between the US and China that caused the metal’s price to spike.

Russia may soon replace Saudi Arabia as the fourth biggest holder of reserves in currency, precious metals and other securities, Bloomberg reported. The news agency estimated the Russian Central Bank’s reserves at around $518 billion, something which have been growing significantly for the past four years, while the Kingdom has around $527 billion at its disposal.

The media outlet indicated that Russian reserves had “swelled 45%” in the past several years despite falling oil prices due to planning its budget with a $40 per barrel baseline price in mind and thus leaving it with significant surpluses even amid $58 per barrel prices. This surplus is then directed to further fill the Central Bank’s reserves.

At the same time, Saudi Arabia planned its budget hoping for much higher crude prices than right now due to an OPEC+ production cut agreement, the news agency pointed out. It reportedly resulted in the Kingdom spending its reserves to sustain its social welfare programmes.

Bloomberg argues that this shift in the “balance of power in the oil world” will result in Russia having a greater impact in future OPEC+ talks on the size of cuts.

The Russian Central Bank made a major shift in its policy last April, when it started drastically reducing its holdings in dollar-denominated assets due to ongoing sanctions pressure from the US, while actively buying gold at the same time, becoming the top buyer of the precious metal in 2018. Russia continued the approach in 2019, securing the position of top gold buyer in the first quarter of 2019.

Source: sputniknews.com

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