Russia’s Central Bank Increases Gold Reserves to Pre-Year Levels
Data from the International Monetary Fund (IMF) reveals that Russia’s Central Bank has boosted its gold reserves in August 2023, reaching the same level as at the beginning of the year. The reserves now stand at 2,333 tonnes. This information was confirmed by Krishan Gopaul, a senior analyst at the World Gold Council.
Russia Boosts Gold Reserves to Counter Western Sanctions
Russia is increasing its gold reserves to mitigate the impact of economic sanctions imposed by the West, particularly in response to its invasion of Ukraine in February 2022. The country is considering the possibility of a gold-backed BRICS currency but has had to use these reserves for international transactions and budget deficits.
Utilizing Reserves to Cover Budget Deficits
In May 2023, Russia’s Central Bank liquidated four tonnes of gold and 2.59 billion yuan (approximately USD $365 million) from the National Wealth Fund (NWF) accounts. These funds were used to finance the country’s budget deficit, which amounted to 3.4 trillion rubles (around USD $42 billion) in the first four months of the year, mainly due to reduced energy revenues.
Selling Gold as Prices Rise
In March, Russia’s Central Bank sold 3.1 tonnes of gold as prices began to rally. Previously undisclosed data on Russia’s monthly gold holdings since February 2022 was also released, showing an increase of 28 tonnes during that period.
Accumulating Gold Reserves for a New Currency?
Some analysts speculate that Russia and China might be accumulating gold reserves to support a new currency that could potentially challenge the dominance of the U.S. dollar. Daniel McCarthy, a strategist at DailyFX.com, raised this possibility.
Anticipation for Currency-Related Announcement
Russia is set to assume the chairmanship of BRICS on January 1, leading to expectations that Russian President Vladimir Putin may make a significant currency-related announcement at the next BRICS summit scheduled for October 2024.
Hot Take: Russia Bolsters Gold Reserves Amid Geopolitical Tensions
Russia’s Central Bank has increased its gold reserves back to the same level as at the beginning of the year, aiming to counter Western sanctions and potential economic challenges. The country’s strategic move to accumulate gold could be linked to its aspiration for a gold-backed BRICS currency, as well as challenging the dominance of the U.S. dollar. While some analysts welcome the transparency in data, questions remain about Russia’s gold production and how these reserves will be utilized in the future. With Russia assuming the BRICS chairmanship, there is growing anticipation for a significant currency-related announcement from President Vladimir Putin at the upcoming BRICS summit in 2024.
Featured Image via Midjourney
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