Russia’s FX reserves slip from its grasp

The Central Bank of Russia’s substantial reserves stockpile was meant to maintain the currency’s stability in the face of market panic.

The reserves — worth $630bn, as of the end of January — are made up of assets and deposits denominated in the world’s major currencies (that is, the dollar, euro, sterling and the yuan). As well almost 2,300 tonnes of gold.

The stockpile was there so that the central bank could intervene in foreign exchange markets, shoring up the rouble in the event of volatility. There’s a Jedi mind-trick aspect to building up reserves too — if markets know you’ve got a load of them, they’re less likely to challenge you to use them.

The sanctions imposed by the US, EU and UK against the central bank are likely to render a lot, if not quite all, of these reserves useless. To understand what the CBR is, and isn’t, likely to have at its disposal when the banks open tomorrow morning, it’s worth taking a close look at what’s known as the “Data Template for International Reserves and Foreign Currency Liquidity”.

The snapshot below was taken from the Twitter account of former Alphavillain Matthew Klein. We tried to find the official data on the central bank’s website, but it was no longer available.

Securities make up a little more than half ($311bn) of what the CBR had at its disposal. According to its annual report, these assets were mostly highly rated, with just 6.8 per cent of them holding less…

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