In April-May, Russia sold 85% of its US government bond portfolio. What does this mean?

As a result of a sharp reduction in investments in US government bonds from $96.1 billion in March to $14.9 billion in May 2018, Russia dropped out of the US Treasury Department list , which lists the largest holders of US Treasuries.

Details

• The sharp decline in US bonds held by the Russian Federation was first noted in April 2018, when US sanctions were imposed against Russia. Then, in a month, Russia got rid of half of the US government securities in its portfolio - the amount of investment in them decreased from $96.1 billion to $48.7 billion. This figure was the lowest since the 2008 crisis year.
• But already at the end of May, this record was broken - the volume of Russia's investments in US government bonds fell another four times, to $ 14.9 billion. For comparison, Kazakhstan ($ 17.6 billion) and Peru ($ 17.1 billion) held a larger amount of US Treasury securities. , South Africa ($24.4 billion). It turns out that from March to May 2018, Russia got rid of 84.5% of US bonds.
• At the same time, the international reserves of the Russian Federation did not decrease and amounted to about $ 457 billion - this means that the Central Bank shifted investments into other assets, which ones are unknown.

Context

• Commenting on the April decline in Russia's investments in US government bonds, the head of the Central Bank, Elvira Nabiullina, spoke about the authorities' desire to diversify reserves, taking into account financial, economic and geopolitical risks. However, the head of the department did not specify where exactly the Central Bank transferred the funds withdrawn from the United States and whether this was due to the April sanctions. The fact that the Central Bank transferred funds from one asset to another is evidenced by the fact that the total volume of Russia's international reserves in April-May remained almost unchanged (from $453.6 billion in March increased to $457.9 billion in April), follows from bank data.
• The list of the largest holders of US government bonds includes 33 countries, the first lines are occupied by China ($1183.1 billion), Japan ($1048.8 billion), Ireland ($301 billion), Brazil ($299.2 billion), Great Britain ($265 billion), Switzerland ($243.4 billion), Luxembourg ($209.1 billion). Rounding out the list is Chile with $30 billion worth of US Treasuries.

Danske Bank's previous reductions in the Russian portfolio of United States Treasury bonds

Liana Faizova