Russia doubles gold and yuan holding limits of the National Wealth Fund


The Russian Finance Ministry said it had doubled its holding limits of gold and Chinese yuan within the National Wealth Fund (NWF).

The new maximum holding limits are set at 40% for gold and 60% for yuan. The previous limits were at 20% and 30%, respectively.

The reason for the upward revision was “to ensure flexibility,” according to the statement provided by Russia’s Finance Ministry.

“In order to ensure flexibility when investing NWF funds, the minimum share of each of the assets within the new structure can be zero, and the maximum share is limited as follows: Chinese yuan – 60% … gold – 40%,” the ministry said

The NWF holds Russia’s oil revenues. Its total value is $186.5 billion, and it was created to help support the pension system.

“NWF is dedicated to support pension system of the Russian Federation to guarantee long-term sound functioning of the system,” the Finance Ministry’s website states. The Fund’s primary mission is to “co-finance voluntary pension savings of Russian citizens and to balance budget of Pension Fund of the Russian Federation.” 

The ministry added that its accounts held in British pounds and Japanese yen at the country’s central bank had been reduced to zero.

A week earlier, Finance Minister Anton Siluanov stated that out of all the “friendly” currencies, the Chinese yuan has the best “reserve” characteristics and has “sufficient liquidity” in Russia’s foreign exchange market.

“The replenishment of the NWF will be carried out in this currency” on a regular basis, Siluanov added.

The fund’s assets held in euro, pounds, and Japanese yen were frozen after sanctions were introduced on Russia following its invasion of Ukraine in February.

About a year and a half ago, the NWF ditched all of its U.S. dollar assets and boosted its gold, euro, and Chinese yuan holdings. 

The NWF’s holdings of the U.S. dollar were reduced from 35% to zero in July 2021. At the time, the fund’s gold holdings were at 20.2%.

The move to de-dollarize was meant to ensure “the safety of the NWF funds in the context of macroeconomic and geopolitical trends of recent years, and decisions aimed at ‘de-dollarization’ of the Russian economy,” the Finance Ministry said a year ago.

Source Kitco News