Russia to Raise Gold Share in Reserves, Eyes Adding Yuan, Ulyukayev Says

http://www.bloomberg.com/news/2011-01-20/russia-to-raise-gold-share-in-reserves-eyes-adding-yuan-ulyukayev-says.html

Russia’s central bank will raise the share of gold in its international reserves, the world’s third largest, from about 8 percent, First Deputy Central Bank Chairman Alexei Ulyukayev said.

"We’ve increased our investment in gold during the last several years and we will continue to move in the same direction in the future," he said in an interview in London. "Gold is a natural part of reserves."

Russia, which aims to diversify its reserves, started adding the Canadian dollar and plans to invest in the Australian dollar. The central bank has almost doubled the share of gold in the past three or four years, according to Ulyukayev. The stockpile comprises 47 percent U.S. dollars, 41 percent euros, 9 percent British pounds, 2 percent Japanese yen and 1 percent Canadian dollars, according to the central bank.

The bank won’t begin to add the Australian dollar until the middle of the year, Ulyukayev said on Dec. 1. Policy makers may also add new currencies to the reserves, with the Chinese yuan a potential target once it becomes fully convertible.

"We are trying our best to diversify the reserves" and investing in managed currencies is difficult, Ulyukayev said today. "If the capital control regime will be changed, in the People’s Republic of China in this case, we can invest in that currency also."

China and Russia bypass USDollar

I told you this would happen. The USDollar's reign as the world's reserve currency is being eroded. Hello, gold and silver.

http://www.bloomberg.com/news/2010-09-08/china-russia-push-yuan-ruble-trading-to-diminish-dominance-of-u-s-dollar.html

China and Russia plan to start trading in each other’s currencies as the world’s second-biggest energy consumer and the largest energy supplier seek to diminish the dollar’s role in global trade.

“Given the risk to the dollar and U.S. assets from their fiscal position they want to reduce their dependence on the dollar as an invoicing currency,” Bhanu Baweja, global head of emerging markets fixed income, currency and credit research at UBS AG, said in a phone interview from London. “It makes sense for two large economies to exclude a third, overly dominant economy from their trading equation.”

In the wake of the global financial crisis, which forced the U.S. economy into recession, both China and Russia have called for the dollar’s role in the financial system to be diluted. Volatility in major currencies is putting the global recovery at risk Zhang Ping, the head of China’s National Development and Reform Commission, said last month. President Dmitry Medvedev last year suggested Russia, holder of the world’s third-largest foreign-currency reserves, reduce its holdings of dollar.

Dollar Elimination

“China wants to reduce the volatility in its access to primary goods,” he said. “They want to reduce their dependence on the dollar in trade transactions.”

“Gradually the dollar is being eliminated from the foreign-trade settlement flows,” said Dariusz Kowalczyk, a Hong-Kong based senior economist at Credit Agricole CIB. “People are beginning to trade Asian currencies without intermediation via the dollar.”