A sharp reduction in Russia's investment in the US public debt will hit Moscow itself first of all. American securities are the most reliable in the world, with a yield of 2-3%, experts say. The de-dollarization, which the Russian authorities have announced, will also not be successful - in the coming decades, neither gold, nor even the Chinese yuan, will be able to replace the US currency.

Moscow distances itself from Washington

Russia has reduced investments in the US public debt. According to US Treasury reports, Moscow reduced its investment in US securities from $3.72 billion in October to $2.409 billion in November. At the same time, the volume of long-term bonds decreased by more than five times - from $554 million to $101 million, and short-term bonds - from $3.166 billion to $2.308 billion.

The three largest holders of US securities remained unchanged. The leader in investments in US bonds was Japan ($1.34 trillion), followed by China ($1.08 trillion) and Great Britain ($621.6 billion). Luxembourg ($334.4 billion) and Ireland ($331.2 billion) became two more large investors in the US government debt. Russia is not even among the ten largest holders of US securities.

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How much Russia can lose

At different times, the yield on investments in US securities was 1-3% per annum. According to Andrey Morozov, president of the Eurasian Business Alliance, keeping reserves in US government bonds has become increasingly risky lately. The threat of new financial anti-Russian sanctions is forcing the Kremlin to pursue a cautious investment course in US securities.

“Russia will not lose anything, because it is not safe to remain in US securities now. In the current economic realities and political reality, it is unprofitable for Moscow to follow the path of China, increasing investments in the US public debt. Such investments are not leverage, but dependence on the United States,” the analyst explained.

In turn, Vasily Solodkov, director of the HSE Banking Institute, did not agree with this position in an interview with. The expert noted that no matter how tough the political relations between Russia and the United States are, there are no alternative securities markets for Russia in the world.

“The US securities market is currently the largest in terms of volume, and it is also absolutely safe (the default on Treasury securities has never been declared - ). It is for this reason that American treasuries are now the most attractive for investments.

The Russian authorities, trying to leave this market, behave like an elephant in a china shop, demonstrating imaginary economic independence, ”the expert concluded.

Not only a political decision

The policy of the Russian authorities to actively withdraw reserves from US government bonds began in 2014 against the background of the crisis between Russia and Ukraine and the annexation of Crimea, after which Western countries imposed sanctions against Moscow. The next round of withdrawing reserves from the US government debt took place in 2018, becoming Russia's political response to another package of international sanctions. Since then, Russian investments in US securities, with rare exceptions, have steadily declined.

Nikita Dolgiy, managing partner of the firm in the field of investment consulting and asset management Wolfline Capital, noted that the reasons for such a strategy in Moscow were not only political, but also economic factors. Thus, the monetary tactics of the US Federal Reserve System (FRS) influenced the decrease in the attractiveness of American securities.

“From 2019 to 2021, the reduction and maintenance of the Fed rate near zero, in any case, did not provide an increase in the profitability of the Russian government portfolio. Due to the global rise in inflation, the American regulator is going to raise the interest rate in the near future, and the real return on investment in US government securities will fall,” the analyst explained.

According to him, Russia bought US government bonds not so much because of high yields, but because of high liquidity and almost zero risks. From March to May 2018, Moscow's investments in the US public debt fell by almost 84% - from $120 billion to $49 billion. “The Central Bank of Russia then bought gold, euros and yuan with the proceeds. The policy of diversification continues even now,” Dolgiy stressed.

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Chinese-style diversification

In addition to reducing investments in US government debt, Russia has been demonstrating in recent years a policy of replacing the dollar in the country's foreign exchange reserves in favor of gold, as well as diversifying in international settlements, using, in particular, Chinese yuan . In this regard, Moscow could invest in the Asian government bond market. However, China, like any country in the world, including the United States, is not immune from financial crises, experts say.

Chinese securities now represent quite a good attraction for foreign investors due to low inflation in the country, Dolgy stressed.“The Chinese bond market is the third largest in the world, and its volume is about 95% of GDP ($17.9 trillion at the end of 2021 - ). On the one hand, the yield of Chinese securities will also be low, as in the case of the US. However, inflation in the Asian country is now being controlled by the state at the level of only 0.9-1.2%.

Therefore, the funds of the Bank of Russia can be completely transferred to Chinese government securities, as well as precious metals, ”the expert emphasized.

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The dollar won't displace even gold

The yuan remains a freely convertible currency to this day, the exchange rate of which is completely dependent on the monetary policy of the Chinese authorities. Unlike the yuan, the dollar is a world currency with a long history, which is almost independent of world inflation. All these factors make the US currency uncontested for the global economy, experts believe.

“You can refuse dollar settlements in the EAEU as much as you like, but what will you then store the funds in - in Kazakh tenge? This is funny. There was a curious character in Venezuela at one time - ex-president Hugo Chavez. In 2010, Russia supplied the Latin American country with $4 billion worth of weapons. In order to “prick” Washington, the Kremlin converted the contract into Venezuelan bolivars. What happened later with the exchange rate of this currency is better not to describe in words, ”Solodkov recalled.

In his opinion, Russia's investment in gold instead of the yuan would be a more attractive investment option for the country. However, the rate of the precious metal is also subject to price fluctuations, sometimes quite sharp. But most importantly, no matter how much gold reserves are in Russia, they still will not save the country's economy in the event of a geopolitical crisis.

“If Russia attacks Ukraine, the Kremlin will get rid of the dollar without any help from the Central Bank, and international payments within the same EAEU will be carried out in squirrel skins or yuan.

In such a situation, even disconnecting the country from SWIFT will seem like flowers, ”concluded Solodkov.

bbabo.Net