Russia Cuts Dollar Holdings From $119 Billion Wealth Fund Amid Sanctions

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3 min readJun 12, 2021

Russia said it will eliminate the dollar from its oil fund to reduce vulnerability to Western sanctions just two weeks before President Vladimir Putin holds his first summit meeting with U.S. leader Joe Biden.

The National Wellbeing Fund will shift its dollar holdings into euros, yuan and gold, Finance Minister Anton Siluanov said.

The dollar pared gains on the news Thursday before bouncing back as analysts said the immediate market impact is likely to be limited. The transfer will take place within the central bank’s huge reserves. It affects about $119 billion in liquid assets, of which about a third is held in dollars.

“The central bank can make these changes to the Wellbeing Fund without resorting to market operations,” said Sofya Donets, economist at Renaissance Capital in Moscow.

Anton Siluanov speaks during the St. Petersburg International Economic Forum on June 3.

Photographer: Anton Novoderezhkin/TASS/Getty Images

Coming ahead of the June 16 Biden-Putin meeting, the move marks another milestone in the Russian leader’s drive to reduce his country’s dependence on the dollar after years of steadily increasing U.S. restrictions.

“Geopolitics does play a role,” Siluanov told state television at the St. Petersburg International Economic Forum. “We’re trying to protect our investments.”

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Russia can make the change within a month, but it’s up to the central bank to determine whether to adjust the distribution of its overall reserve holdings, he said.

The central bank isn’t planning to resume gold purchases as a result of the wealth-fund shift, a person familiar with the situation said, speaking on condition of anonymity to discuss matters that aren’t public.

“Coming from Russia, it’s largely symbolic,” said Elina Ribakova, deputy chief economist at the International Institute of Finance in Washington. “Should there be any issues with larger U.S. dollar holders, that would be different.”

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“This decision is logical in the context of the stubborn standoff with the U.S.,” said Oleg Vyugin, a former senior central bank official. “But in terms of risk/return, exiting dollar assets to replace them with the ones they list is most likely to be economically unattractive.”

Russia’s wealth fund currently holds 35% of its liquid assets in dollars, worth about $41.5 billion, with the same amount in euros and the rest spread across yuan, gold, yen and pounds.

After the change, the fund’s assets will be held 40% in euros, 30% in yuan, 20% in gold and 5% each in yen and pounds, Siluanov said. The Finance Ministry said late Thursday that regulations were amended last month to reflect the new proportions, adding that it will disclose later when the actual holdings are changed.

Dollar Out

Russia cuts out dollar from its wealth fund, adding to euro, gold, yuan

Source: Russia’s Finance Ministry

The central bank doesn’t comment on plans for its foreign-exchange reserves. “Of course, the currency structure of the government’s reserves is one of the factors we take into account,” Bank of Russia Governor Elvira Nabiullina said, according to Interfax.

The wealth fund holds savings from Russia’s oil revenues above a cutoff price and is used to help offset shortfalls when the market falls below that level. Together with illiquid assets, its total value is $185.9 billion. With the economy recovering faster than expected, the budget deficit will be 1% of gross domestic product this year, Siluanov said, narrower than the 2.4% initially planned.




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