By Clement Bigot, for Eurasia Business News – September 8, 2021

The international reserves of the Russian Federation as of September 1, 2021 amounted to $ 618.181 billion, which is 2.86% (or $ 17.18 billion) higher than at the beginning of August, reported the Russian Central Bank.

As of September 1, 2020, the international reserves of the Russian Federation amounted to $ 594.422 billion.

During the reporting month, the Russia’s foreign exchange reserves increased by 4.15% – to $ 485.484 billion. The price of monetary gold decreased by 1.61% and amounted to $ 132.697 billion.

The international reserves of the Russian Federation are highly liquid foreign assets held by the Central Bank and the Russian government. The reserves are made of foreign currency funds, special drawing rights (SDR), reserve position in the IMF and monetary gold.

In the recent years the Russian Federation has been purchasing significant amounts of gold, in order to strengthen the ruble and the national economy against external challenges. In the first quarter of 2019, Russia purchased 55.3 tons of the yellow metal. By the end of 2020, the Bank of Russia increased the volume of monetary gold reserves as part of international reserves by 0.9 million ounces (about 28 tons), or 1.2%.

In January 2021, the volume of monetary gold reserves in international reserves amounted to 73.9 million ounces (about 2.3 thousand tons of gold) for $ 138.75 billion, reported the Russia’s Central Bank. This is 23.3% of Russia’s total reserves. Due to the rise in gold prices, its value in reserves jumped 25.7% over the year.

The Bank of Russia has been actively buying gold since 2014 and was the leader among the world’s central banks in terms of purchases. During this time, Russian has more than doubled the amount of gold in reserves. Also, the Bank of Russia was the largest consumer of gold in the country. It purchased about 45% of the gold production from Russian mining sites in 2019. According to the Russian Union of Gold Producers, at the end of 2019, compared to the previous year, gold production in Russia increased by 12% to 367,952 kg.

The geopolitics of gold

The desire to weaken the dependence of the Russian financial system on foreign currency, primarily on the US dollar, fuels the purchase of gold by Russia.

The largest buyers of the yellow metal today are Russia and China. These countries want to diversify their gold and foreign exchange reserves, reducing the potential dependence of their financial systems on the leading world currencies – the dollar and the euro, and therefore on the United States and the European Union.

Thus, if at the beginning of 2018 Russia owned US government bonds worth about $ 100 billion, then at the end of October 2020 (the latest available data from the US Treasury), Russian held only $ 6 billion.

In 2018-2019 Russia was the largest buyer of gold in the world with 274 and 158 tons, respectively. 

The Bank of Russia added 3.1 tonnes of gold to its reserves in July 2021, restoring gold reserves to 2,295 tonnes. Russia is not alone on this path of increasing gold reserves. The yellow metal held by China’s central bank – the People’s Bank of China (PBoC) – is officially listed at 1,948.31 tonnes (as of June 2021). 

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© Copyright 2021  – Clement Bigot, legal expert and consultant in international relations.