You are currently viewing Russia in trouble: lost access to half of its reserves

Russia already has lost access to nearly half of their reserves and sees more risks to the war chest of the President Vladimir Putin due to increased pressure from the West on ChinaHe said finance Minister, Anton Siluanov. “The total volume of our reserves is about 640 billion dollars, and about 300 billion dollars are in such a state that we cannot use them now,” he added.

“We see what pressure Western countries put on China” to limit access to yuan reserves, the official explained. “But I think our partnership ties with China will allow us to not only preserve it but expand it,” he added.

The Russian Central Bank’s asset freeze is part of a series of economic sanctions imposed on Moscow over the invasion of Ukraine, now entering its third week. According to Russian government data released in January, it shows that $100 billion of reserves were held in US dollars as of June, accounting for 16.4% of total cash at the time.

While euro holdings accounted for 32.2% and yuan 13.1% at the end of June 2021, China promised to continue normal trade relations with Russia, which is seen as a strategic partner, despite the corporate exodus of many European and US companies, reported Bloomberg.

Pay the debt

“Russia will pay the debt in rubles until its cash pile is unfrozen,” Siluanov said. The Bank of Russia introduced capital controls after international governments froze their foreign exchange reserves. The restrictions have raised the possibility of the nation’s first debt default since 1998.

Russia’s war against Ukraine has inflicted a domestic cost that is already comparable to the worst recessions in President Vladimir Putin’s more than two decades in power. An economy that was on track to expand this year flipped into reverse in a matter of days.

The Russian central bank will also keep the stock market on the Moscow Stock Exchange closed until at least March 18, extending a record shutdown intended to protect domestic investors from the impact of harsh sanctions over Russia’s invasion of Ukraine. The current level of reserves allows even those banks “that have become the target of the toughest sanctions” to function, Siluanov said.


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