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By Alex Nicholson and Paul Abelsky
Nov. 25 (Bloomberg) -- Russia’s central bank will add Canadian dollars to its reserves and may include more currencies as it seeks to reduce its dependence on the U.S dollar.
“Technical preparations for transactions in Canadian dollars are underway,” Sergei Shvetsov, the bank’s financial operations head, told lawmakers in Moscow today, in remarks confirmed by a Bank Rossii official. “Then there may be one, two other currencies and that’s it.”
Russia aims to diversify its reserves, increase gold holdings and promote regional currencies in trade and finance to reduce risks posed by the dollar’s dominance. President Dmitry Medvedev has blamed the global financial crisis on an over- reliance on the U.S. currency. Russia’s interest in buying assets denominated in Canadian dollars is also part of its strategy of reducing exchange-rate volatility, said Vladimir Bragin, an economist at Trust Investment Bank in Moscow.
“They may not be seeking to invest a large amount of money,” Bragin said. Russia may be interested in buying bonds backed by the Canadian government or high-quality corporate debt, he said, and “the global economic recovery will boost prices for natural resources, strengthening the Canadian dollar.”
Canada’s dollar, nicknamed the loonie, appreciated to the highest in a week after the Russian announcement. The currency strengthened as much as 1.2 percent to C$1.0453 per U.S. dollar, the highest since Nov. 18, and was up 1 percent at 8:07 a.m. in Toronto, from C$1.0580 yesterday.
Shield Reserves
Russia’s decision reflects a desire to shield reserves against the dollar’s decline after the U.S. currency lost 13.3 percent against the euro in the past 12 months, making it the worst performer against Europe’s single currency of the 16 major currencies tracked by Bloomberg in the period.
The world’s biggest energy supplier is increasing foreign reserves in an effort to stem gains in the ruble. The Russian currency gained 8.7 percent against the dollar in the past three months, making it the second-best performer of the 26 emerging market currencies tracked by Bloomberg.
The ruble was little changed against the dollar and trading at 28.7915 at 5:20 p.m. in Moscow. Against the euro, the ruble lost 0.7 percent to trade at 43.4213.
Russia is in talks with India and Brazil to use their currencies in trade, First Deputy Central Bank Chairman Alexei Ulyukayev said last month. Russia already has agreements that allow the use of the ruble and yuan in cross-border trade, he said.
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IMF sells 10 tonnes of gold to Sri Lanka
Wed Nov 25, 1:55 pm ET
WASHINGTON (AFP) – The International Monetary Fund said Wednesday it had sold 10 tonnes of gold to Sri Lanka's central bank for 375 million dollars, as part of a restructuring of IMF financial resources.
It was the third IMF sale of gold in a month as the Washington-based institution, the world's third-largest official holder of the precious metal, seeks to reduce its dependence on lending revenue and bolster its finances amid the global economic crisis.
The IMF said the sale to the Central Bank of Sri Lanka was based on the market prices prevailing Monday.
On November 2, the IMF sold 200 tonnes of gold to India's central bank for 6.7 billion dollars, then sold two tonnes of gold to Mauritius on November 16 for 71.7 million dollars.
The IMF executive board approved in September the sale of 403.3 tonnes of gold. The fund, which currently holds roughly 3,000 tonnes of gold, is the third-largest official holder of the precious metal after the United States and Germany.
The IMF said it would sell gold directly to central banks and other official holders for an initial period before selling the remaining amount on the open markets "in a phased manner over time."
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