Russia's finance minister has admitted that the country can't use nearly half its foreign exchange reserves, which are seen as a crucial tool for countering Western economic sanctions.
In an interview with Russian state television Sunday, Anton Siluanov said Russia held about $640 billion in foreign reserves, and about $300 billion of that amount was frozen under sanctions imposed by the US, Europe, and other Western nations, according to a report by Interfax, the independent Russian news agency.
Western nations have applied sweeping sanctions aimed at crippling Russia's economy after it invaded Ukraine. The first wave of sanctions targeted Russia's central bank and its foreign exchange reserves, inhibiting Russia's ability to prop up its economy and finance its war.
Russia held $100 billion, or 16%, of its foreign reserves in US dollars as of June 2021, according to Bloomberg, which cited figures from the country's central bank. Another 32% of the foreign reserves were held in euros.
Russia's relations with China remain a bright spot for the Kremlin. However, in his Sunday interview, Siluanov noted "pressure" was being applied by Western countries on Beijing to restrict Russia's use of its yuan-denominated reserves, which made up 13% of its foreign reserves in June last year.
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"Certainly, pressure is being mounted in order to restrict access to the reserves that we placed in yuan," Siluanov said, according to Interfax. "But I believe that our partner relations with China will nevertheless allow us to maintain the cooperation that we have reached, not just maintain but multiply it in an environment where Western markets are closing."
China has not publicly condemned Russia's war with Ukraine or referred to it as an invasion.
According to Interfax, Siluanov reiterated Sunday that Russia would pay its foreign currency sovereign debt in rubles until it could access its international reserves.
"I think it's absolutely fair when we say that we don't refuse to meet state obligations, we will pay them in rubles until our foreign exchange reserves are unfrozen," he said, citing the need to pay for "critical imports" such as food and medicines.
The ruble has plunged since the invasion of Ukraine. It's down about 40% against the US dollar year-to-date. There are growing concerns that Russia could default on its debt.
On Sunday, International Monetary Fund managing director Kristalina Georgieva told CBS "Face the Nation" that "in terms of servicing debt obligations, I can say that no longer we think of Russian default as improbable event". Source: Buisnesinsider..