The Central Bank will add Canadian dollars to its reserves and may include more currencies as it seeks to reduce its dependence on the U.S. dollar, it said Wednesday.
“Technical preparations for transactions in Canadian dollars are underway,” Sergei Shvetsov, the bank’s financial operations head, said in prepared remarks. “Then there may be one, two other currencies, and that’s it.”
Russia aims to diversify its reserves, increase gold holdings and promote regional currencies in trade and finance to reduce risks posed by the dollar’s dominance. President Dmitry Medvedev has blamed the global financial crisis on an overreliance on the U.S. currency. Russia’s interest in buying assets denominated in Canadian dollars is also part of its strategy of reducing exchange-rate volatility, said Vladimir Bragin, an economist at Trust Investment Bank.
“They may not be seeking to invest a large amount of money,” Bragin said. Russia may be interested in buying bonds backed by the Canadian government or high-quality corporate debt, he said, and “the global economic recovery will boost prices for natural resources, strengthening the Canadian dollar.”
Canada’s dollar, nicknamed the loonie, appreciated to the highest in a week after the Russian announcement. The currency strengthened 0.7 percent to 1.05 Canadian dollars per U.S. dollar at 11 a.m. in Toronto.
Ulyukayev said Sept. 29 that Russia would avoid diversifying into Australian and Canadian dollars on liquidity concerns.
Russia’s reserves, the world’s third largest, are currently made up of 47 percent U.S. dollars, 41 percent euros, 10 percent pounds and 2 percent yen. The country keeps about 35 percent of its international reserves in U.S. Treasury debt.
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