Russia to Ditch US Dollar in Favor of the Ruble
Russia will unseal its $88 billion Reserve Fund and use it to acquire rubles. reports Bloomberg.
“Together with the central bank, we are selling a part of our foreign-currency reserves,” Finance Minister Anton Siluanov said in Moscow yesterday. “We’ll get rubles and place them in deposits for banks, giving liquidity to the economy.”
This makes sense on a number of levels. The US dollar is very overvalued at present, to sell dollars for rubles makes sense. Secondly, by funding Russian banks with purchased rubles, rather than printing new rubles, Russia will put some stability under the ruble.
The entire 500 billion rubles or part of the amount will be converted in January-February through the central bank, according to Deputy Finance Minister Alexey Moiseev.
Could Putin's end game, once he ditches Russia's dollar holdings, to make the ruble convertible into gold? The possibility can not be ruled out, especially with the very smart and careful Elvira Nabiullina running Russia's central bank.