Russia reduces its investment in US treasuries
Investment Bank of Russia in the us government bonds in August 2018 fell to $14,097 billion over the last three months, Russia has almost not changed the size of attachments. In July, Russian investment in US treasuries was $14,907 billion in June to $14,910 billion in may — $14,905 billion In August, Russia has also reallocated their investments in favor of short-term Treasury securities.
So, if at the end of July was $9.1 billion in long-term (with maturity more than one year) and $5.8 billion of short-term, at the end of August was $3.4 billion in long-term and $10.7 billion in short-term. For the first time, at least since 2011, Russia has more short than long papers. The latter is probably connected not with politics, but with expectations of a further interest rate hike, the United States.
The Russian standard portfolio of U.S. bonds has always exceeded $100 billion, however, due to the risk of the sanctions of arrest, the Central Bank sharply reduced the attachment data. While us bonds remain the most liquid and reliable financial instrument in the world. Moscow’s decision to sell most of the portfolio is clearly forced.
Only Russia’s international reserves now amount to $459 billion, of which $80 billion – monetary gold. In principle, the size of international reserves is comparable to the size of external debt, which is calculated according to the methodology of the Bank of Russia, that has meant not only sovereign debt but also the debt of non-financial sector, financial companies and other external obligations. In other words, even if the collective West will decide to freeze Russian investments, Russia could easily impose a moratorium on foreign debt payments.
But this, of course, the most extreme measure, and think about a complete rupture of Russia with the global economy definitely not desirable. The fall of capitalization of the companies, recession and the technological gap will be a quick consequence of international isolation.
The Director of analytical Department,