Russia’s vast offshore reserves could roil international money markets

Russia’s vast offshore reserves could roil international money markets

The world’s money markets will suffer if Ukraine-related sanctions target Russia’s huge offshore reserves, according to Credit Suisse as reported by Bloomberg on Thursday.

The Swiss banking giant says Moscow has about $300 billion of foreign currency held abroad – enough to disrupt money markets if the reserves are frozen or if Moscow is forced to suddenly move them due to sanctions over the crisis in Ukraine, the business outlet quotes Credit Suisse Group AG strategist Zoltan Pozsar as saying.

“When flows change, spreads can gap,” Pozsar told Bloomberg. “If things escalate, it’s hard not to see a direct impact on FX swaps and US dollar Libor fixings given Russia’s vast financial surpluses and where those surpluses are deployed.”

Pozsar estimates that Russia’s central bank and private sector are holding $200 billion in foreign-exchange swaps and $100 billion in deposits at foreign banks – enough to substantially shift funding markets. According to his figures, Russia holds almost $1 trillion of liquid wealth, and a large share of that is held in US dollars, even after the country sold all its Treasuries holdings in 2018. Pozsar analyzed data from the Bank of Russia and financial markets to calculate the figures, according to Bloomberg.

The warning comes as the US and the European Union announced sweeping sanctions against Russia in response to its military action in Ukraine. The measures threaten to hit 70% of the Russian banking sector and aim to derail the country’s oil, technology, and airline industries. The EU also seeks to target Russian money in Europe. According to European Commission President Ursula von der Leyen, the measures would curb deposits held by Russia’s elites “so that they cannot hide their money anymore in safe havens in Europe.” She also announced on Saturday that the EU is preparing to cut a number of Russian banks from the SWIFT international system of interbank transfers and “paralyze” the assets held by Russia’s central bank.

The regulator reported on Thursday that Russia's international reserves reached a new historical maximum of $643.2 billion as of February 18. The country’s vast holdings of gold and foreign currencies could be used to help offset the impact of sanctions.

For more stories on economy & finance visit RT's business section

Source: www.rt.com

The last notes - Экономика

most read news

#Экономика

The US has held ‘encouraging’ talks with India about a price cap on Russian oil that Washington wants to introduce in order to limit Moscow’s revenues and push down global crude prices, Reuters
подробнее...

The EU is planning to increase liquefied natural gas (LNG) imports from Nigeria amid concerns that supply from Russia may be cut, according to the deputy director general of the European Commission’s
подробнее...

France has announced a takeover bid to gain full control of the country’s largest energy utility, EDF.The government has made an offer of €9.7 billion ($9.9 billion) to nationalize electricity
подробнее...

The business climate has substantially worsened in Germany, with industries feeling increasingly concerned about the coming months, according to a survey by a German think tank released on Monday.
подробнее...

The Ukrainian government has moved to delay payments on foreign debt for two years, the country’s media reported on Wednesday. The restructuring will have to be approved by the creditors first, the
подробнее...

Twitter operated at a loss in the second quarter and suffered a decline in revenue from a year earlier, reflecting struggles that the company blamed partly on its pending sale to billionaire Elon
подробнее...

The Chinese currency the yuan outperformed the euro by trading volume on the Moscow Exchange (MOEX) for the first time on record, trading data from Friday shows.According to the data, the trading
подробнее...

Russia will resume natural gas deliveries via the Nord Stream 1 pipeline as scheduled, once annual maintenance work is completed on Thursday, Reuters has reported, citing its sources.The
подробнее...

Cargo shipments via Russia’s Northern Sea Route in the first half of this year were 5% higher than in the same period of 2021, Russian Deputy Prime Minister Alexander Novak said on Monday.“In 2021,
подробнее...

The German government and energy major Uniper are reportedly nearing an agreement under which the state will inject more than €5 billion ($5.1bn) into the business. The total commitment is likely to
подробнее...

Russian energy major Gazprom will stop the operation of second Siemens turbine, the company announced on Monday. As a result supply through the Nord Stream 1 pipeline will not exceed 33 million cubic
подробнее...

Ukraine’s state-run energy company Naftogaz has defaulted on its foreign debt, the firm announced on Tuesday.Naftogaz was unable to make payments on Eurobonds before a grace period expired, the
подробнее...

The Russian Finance Ministry has announced a return to the public debt market by issuing a limited amount of OFZs, ruble-denominated sovereign bonds, in September, Deputy Finance Minister Timur
подробнее...

Germany may face shortages of such staples as toilet paper and cardboard if Russian gas supply dwindles in the coming months, German outlet Zeit Online reported on Wednesday.Operating paper plants may
подробнее...

Russia’s military operation in Ukraine and the subsequent Western sanctions on Moscow might push the global economy into geopolitical fragmentation, the IMF warned in a report published on July 26.“A
подробнее...

The EU has blocked a proposal to impose sanctions on Russian titanium producer VSMPO-AVISMA, the Wall Street Journal (WSJ) reported on Thursday.According to the report, the decision was made after
подробнее...

EU energy ministers have agreed on an unprecedented plan that will see member states voluntarily slash their gas consumption by 15% from August until next spring. The deal does come with exemptions
подробнее...

China’s C919 narrow-body jet, the country’s first domestically designed commercial passenger aircraft, is nearing certification, having successfully passed test-flight tasks, state-owned manufacturer
подробнее...