MOSCOW (Dispatches) - Russia sold $5 billion of U.S. currency from its oil fund in May as part of a drive to reduce exposure to the greenback in its currency reserves and make the country less vulnerable to Western sanctions, the Finance Ministry said.
According to its statement, Russia’s National Welfare Fund (which holds savings from Russia’s oil revenues) converted $4 billion into yuan and $1 billion into euros. The ministry said last week that it would eliminate all greenback exposure in the fund, which leaves $35 billion in dollar holdings still to cut.
“This may have been driven by a desire to achieve a PR effect just before the upcoming Biden-Putin summit,” Ivan Tchakarov, an economist at Citigroup in Moscow, told Bloomberg. “It may, however, also be a transitory step toward a real restructuring of the currency reserves down the road, which, if it happens, must be done on-market.”
Russian President Vladimir Putin said at the recent St. Petersburg Economic Forum that while Moscow doesn’t want to stop using the dollar completely, sanctions have forced the country to look for alternative payment methods.
De-dollarization has been Russia’s long-term policy for many years, with a focus on relying less on the world’s most popular reserve currency. Last year, it was revealed that the first quarter of 2020 saw the share of the U.S. dollar in trade between Beijing and Moscow fall below 50% for the first time. Just four years prior, this figure accounted for over 90% of their bilateral currency settlements.
Cuba Suspends Dollar
The Cuban government has announced it will temporarily stop accepting cash bank deposits in dollars. It blamed tighter U.S. sanctions that are restricting its ability to use the greenback abroad.
The move comes as the government was due to present its annual resolution to end the decades-old U.S. trade embargo on the country at the United Nations General Assembly. Cuban bank account holders will have until June 21 to deposit dollars before the suspension takes effect.
“It is ever more difficult for Cuba to find international banking or financing institutions willing to receive, convert or process U.S. currency in cash,” the Cuban Central Bank said in a statement, according to Reuters. It added that the measure would not affect operations carried out by transfer or deposits in other currencies that are freely convertible and accepted in the country.
According to the bank’s vice president, Yamile Berra Cires, more than 20 banks have halted processing transactions involving Cuba since former U.S. president Donald Trump hardened sanctions on the island nation.