Russia to cut share of US dollar, considers yuan

MOSCOW (Reuters) – Russia will reduce the share of the US dollar in its National Wealth Fund and is considering investing in other foreign currencies, including the Chinese yuan, Deputy Finance Minister Vladimir Kolychev said on Wednesday.

Kolychev confirmed a Reuters report from earlier this month that Russia was planning to diversify its foreign currency holdings in 2020.

Kolychev said the move was in part meant to shield Russian reserves from external risks. He did not give an exact figure for what the US dollar’s share would be trimmed to in the National Wealth Fund.

The US unit made up about 36% of the National Wealth Fund, or $124.5 billion, as of end-October, according to Reuters calculations based on finance ministry data.

“Geopolitical risks are one of the key factors in determining the structure of the National Wealth Fund,” he told reporters on the sidelines of a conference in central Moscow.

Russia had stepped up what it calls a de-dollarization process to reduce its dependence on the US currency, when Moscow’s relations with the West deteriorated over Russia’s annexation of Crimea in 2014 and its role in the Ukrainian crisis.

“I can say with certainty that the US dollar share will be smaller,” Kolychev said. “Different currencies are being considered... including the yuan.”

The structure of Russia’s international reserves has already changed, and the planned changes to the National Wealth Fund will bring its composition closer to that of the central bank’s foreign currency reserves, Kolychev said.

“We are just synchronizing more with the central bank.” The euro accounted for 30.3% of the central bank’s reserves as of March 31. The US dollar’s share was 23.6%, the Chinese yuan accounted for 14.2%, and the pound for 6.6% . The Japanese yen, the Canadian dollar and the Australian dollar altogether accounted for 7.1%.