Russia Dumps the U.S. Dollar for Euro as Reserve Currency

[hugolp]

About 47.5 percent of the currency assets of the Russian Central Bank were based on the euro, whereas the dollar-based assets made up 41.5 percent as of the beginning of the current year. The article says there could be some circumstancial explanation for this, but to me, altogether with the rest of the news, it seems like the dollar dumping is gaining speed.

http://www.marketoracle.co.uk/Article10755.html

Russia Dumps the U.S. Dollar for Euro as Reserve Currency
Currencies / Global Financial System May 19, 2009 - 07:37 PM

The US dollar is not Russia’s basic reserve currency anymore. The euro-based share of reserve assets of Russia’s Central Bank increased to the level of 47.5 percent as of January 1, 2009 and exceeded the investments in dollar assets, which made up 41.5 percent, The Vedomosti newspaper wrote.

The dollar has thus lost the status of the basic reserve currency for the Russian Central Bank, the annual report, which the bank provided to the State Duma, said.

In accordance with the report, about 47.5 percent of the currency assets of the Russian Central Bank were based on the euro, whereas the dollar-based assets made up 41.5 percent as of the beginning of the current year. The situation was totally different at the beginning of the previous year: 47 percent of investments were made in US dollars, while the euro investments were evaluated at 42 percent.

The dollar share had increased to 49 percent and remained so as of October 1. The euro share made up 40 percent. The rest of investments were based on the British pound, the Japanese yen and the Swiss frank.

The report also said that the reserve currency assets of the Russian Central Bank were cut by $56.6 billion. The losses mostly occurred at the end of the year, when the Central Bank was forced to conduct massive interventions to curb the run of traders who rushed to buy up foreign currencies. The currency assets of the Central Bank had grown to $537.6 billion by October 2008. Therefore, the index dropped by almost $133 billion within the recent three months.

The majority of Russian companies, banks and most of the Russian population started to purchase enormous amounts of foreign currencies at the end of 2008. The dollar gained 16 percent and the euro 13.5 percent over the fourth quarter. The demand on the US dollar was extremely high, and the Central Bank was forced to spend a big part of its dollar assets, experts say.

The change of the structure of the currency portfolio of the Bank of Russia has not affected the official peg of the dual currency basket, which includes $0.55 and 0.45 EUR.

The investments of the Bank of Russia in state securities of foreign issuers have been considerably increased, the report said. About a third of Russia’s international reserves are based on US Treasury bonds.

Russia became one of the largest creditors of the US administration last year, the US Department of the Treasury said. Russia increased its investments in the debt securities of the US Treasury from $32.7 billion as of December 2007 to $116.4 billion as of December 2008.

[not.your.average.joe]

Funny how this trend seems to be building... Also funny how the U.S. doesnt really seem to care, I dont understand this... You would think that it would be a top concern, yet it doensnt seem to be at all. This is what makes me think they have some sort of plan, and not a plan that any of us will be happy with.

*edit, dollar has been taking further steps down

[hugolp]

Funny how this trend seems to be building... Also funny how the U.S. doesnt really seem to care, I dont understand this... You would think that it would be a top concern, yet it doensnt seem to be at all. This is what makes me think they have some sort of plan, and not a plan that any of us will be happy with.

*edit, dollar has been taking further steps down

I think this is the plan:

[sailor]

Russia has been slowly diversifying for years now, but I guess this is a landmark event, because for the first time they hold more Euros than Dollars.

[RonPaulCentral]

I think this is the plan:

ROFL. I do believe you are correct!

[hugolp]

Thecnical analisis video on the dollar from 2001 http://broadcast.ino.com/education/f.../?campaignid=3

Its not looking good.

[HOLLYWOOD]

Oh Yeah, the fiscal clowns in the US have a plan.

So where's the $10's of BILLIONS in free money we gave the USSR aka Russia and her satellite states over the past 15 years to help with "DEMOCRACY & STABILITY? Oh, that went to the Oligarchs, which in turn, took over anything of value in the country.

It seems, RUSSIA was the scrimmage game for "TOO BIG TO FAIL"

American taxpayers: Screwed once again by the Empire in Washington DC.

Next up: How do we get the Taxpayers to pay for even more? Oh, Borrow from future generations. I'll run up my credit cards to stimulate the economy, and when the bills come due, I'll borrow to pay the interest, then borrow, to pay the principal, etc etc.. hopefully I can pass the debt onto the future generations

Funny how this trend seems to be building... Also funny how the U.S. doesnt really seem to care, I dont understand this... You would think that it would be a top concern, yet it doensnt seem to be at all. This is what makes me think they have some sort of plan, and not a plan that any of us will be happy with.

*edit, dollar has been taking further steps down

[Dieseler]

I think we will NWO who our real Government is within the year.
We are being dismantled.

[pinkmandy]

That was as of Jan 1. Wonder what their holdings are almost 6 months later?

[slacker921]

The dollar is currently 81.096 ... down 1.29% today.

Russia made a smart move in stepping away from the dollar, and I bet we'll find that they shed a lot more dollars in the last month or so.

[muh_roads]

Time for war with russia and "liberate" its' people. Get ready for the propaganda.

[Brassmouth]

Time for war with russia and "liberate" its' people. Get ready for the propaganda.

Nah, I expect a war with China if they decide to act rationally and stop producing gifts for us.

[sailor]

Time for war with russia and "liberate" its' people. Get ready for the propaganda.

Send in the weapons inspectors to see if Russia has any WMDs?

[Arklatex]

Not quite yet they say:

MOSCOW, May 20 (Reuters) - The dollar remains the top currency in Russia's foreign exchange reserves, the central bank said on Wednesday, qualifying an earlier report that suggested the euro had edged ahead in the world's third biggest reserves.
The central bank's annual report on Monday had prompted speculation that Russia was trying to limit its exposure to the dollar, as it did during the past year by fully offloading $100 billion of bonds from U.S. agencies Fannie Mae and Freddie Mac.

http://www.guardian.co.uk/business/feedarticle/8517156

[Zippyjuan]

I believe that Russia was selling off some of their dollar holdings to keep the value of the ruble from falling too much in the recent economic crisis. This article is from January:
http://www.blnz.com/news/2009/01/22/...tion_8697.html

The central bank has already spent tens of billions of dollars over the last months in interventions to prop up the ruble's value.

Russia's forex reserves dropped 30.3 billion dollars to 396.2 billion dollars in the week January 9-16, below the psychologically important 400 billion rubles level.

However taken together, these piecemeal devaluations mean that the ruble has already lost around 25 percent of its value against the euro and the dollar since the process began on November 11.

[hugolp]

I believe that Russia was selling off some of their dollar holdings to keep the value of the ruble from falling too much in the recent economic crisis. This article is from January:
http://www.blnz.com/news/2009/01/22/...tion_8697.html

So says the article. Obviously this could be just some technical circumstance, but if you put all the news about China, Brasil, Arabia, and this together, it gets scary.

Not quite yet they say:

http://www.guardian.co.uk/business/feedarticle/8517156

Wonder why a british media would not publish the original report, but it did publish this one.

[Mitt Romneys sideburns]

Funny how I watched the news all day and still managed to hear nothing about any of this.

[MsDoodahs]

Happy Friday morning to me, since I did not read this thread yesterday.



<sigh>

Not a word of this on the news, either, Mitt.

[wd4freedom]

Funny how this trend seems to be building... Also funny how the U.S. doesnt really seem to care, I dont understand this... You would think that it would be a top concern, yet it doensnt seem to be at all. This is what makes me think they have some sort of plan, and not a plan that any of us will be happy with.

*edit, dollar has been taking further steps down

Unfortunately the FED knows that if they restored the value of the dollar right now you would see a complete economic collapse with unemployment well into the 40% rate- then riots. Then China, Russia, India, etc. would literally come in and buy the USA by purchasing our assets across the country. The hole we have dug may in fact not be refillable.

[Zippyjuan]

A weaker dollar is good for the domestic economy. It makes imports more expensive and our exports to other countries cheaper. This encourages more domestic goods bought and manufactured over buying imported ones. A strong dollar makes it harder to export goods but easier to export jobs.

[tpreitzel]

exports, exports? Oh, you mean like computer software where replication is quicker and more prolific than a litter of cats or McDonald's training seminars?

[Zippyjuan]

If you are interested:

TRADE SPOTLIGHT: RELEASE OF ANNUAL 2008 FIGURES
��
The largest export markets for U.S. goods in 2008 (with percent increase over 2007) were Canada ($261.4 billion, up 5.0%), Mexico ($151.5 billion, up 11.4%), China ($71.5 billion, up 9.5%), Japan ($66.6 billion, up 6.2%), and Germany ($54.7 billion, up 10.2%).
��
Capital goods represent the largest goods export category (end-use) for the U.S. with $469.5 billion worth of exports in 2008. The U.S. trade surplus in capital goods rose $12.8 billion to reach $15.7 billion in 2008, up from a surplus of $2.9 billion in 2007.
��
The top growth categories for capital goods products in 2008 were medicinal equipment (up $3.3 billion), materials handling equipment (up $2.7 billion), industrial engines (up $2.7 billion), telecommunications equipment (up $2.6 billion), and civilian aircraft engines (up $2.5 billion).
��
Industrial supplies the largest growth category in dollar value represented $387.3 billion of U.S. exports in 2008, up $70.9 billion (or 22.4 percent) from 2007.
��
The top growth categories for industrial supplies in 2008 were fuel oil (up $19.3 billion), other petroleum products (up $8.5 billion), nonmonetary gold (up $5.4 billion), chemicals-fertilizers (up $4.5 billion), and steelmaking materials (up $4.3 billion).
��
Foods, feeds, and beverages represented $108.4 billion of U.S. exports in 2008, and was the second largest export growth category (end-use) for the U.S., with exports rising $24.2 billion (or 28.7 percent) over 2007. The U.S. trade surplus in foods, feeds, and beverages rose $16.8 billion to reach $19.4 billion in 2008, up from a surplus of $2.6 billion in 2007.
��
The top growth categories for foods, feeds, and beverages in 2008 were soybeans (up $5.6 billion), meat and poultry (up $3.7 billion), corn (up $3.4 billion), and wheat (up $3.0 billion).
��
U.S. services exports totaled $551.6 billion in 2008, up $54.4 billion (or 10.9 percent) from 2007. This rise in exports helped the U.S. to have a record trade surplus in services at $144.1 billion, up $24.9 billion (or 20.9 percent) from 2007.
��
The top services export categories were other private services, which includes items such as business, professional and technical services, insurance services, and financial services ($241.0 billion), travel ($111.5 billion), royalties and license fees ($91.1 billion), other transportation ($60.2 billion), passenger fares ($31.4 billion), and government services ($16.3 billion).

http://www.ita.doc.gov/press/press_r...eet_021109.pdf

[hugolp]

A weaker dollar is good for the domestic economy. It makes imports more expensive and our exports to other countries cheaper. This encourages more domestic goods bought and manufactured over buying imported ones. A strong dollar makes it harder to export goods but easier to export jobs.

You are right, but there are two catches:

- You are empoverishing the whole country by devaluating the dollar. And you really dont need a weak currency to export (check Germany or Japan).

- It takes time and resources to re-build the industrial power of a nation. Its not like devaluating will automatically bring the industry back.

[Zippyjuan]

True it does take time. We had a strong dollar for a long time- and lost a lot of jobs overesas.

[tpreitzel]

Personally, the cited report is useless to me without raw numbers. Pure dollar statistics and percentages are potentially misleading without raw numbers just like saying the US has never experienced a hyperinflation based on using an arbitrary year of an inflated, fiat currency as a standard to judge inflation of relative years. Granted, the world was and still is in the middle of a financial crisis which manifested itself during the latter part of 2008 so it's a logical assumption that the quantity of raw exports improved during that period due to weakness in the dollar (also inflates YTY dollar figures). Has the cited statistics translated into new jobs at home? Is excess capacity being dumped? Is production and employment increasing in the cited categories, especially capital goods? Frankly, your cited statistics raise more questions than answers. I don't have much time so the posting of raw numbers would be much more helpful to readers including myself.

[hugolp]

True it does take time. We had a strong dollar for a long time- and lost a lot of jobs overesas.

It was not really the strong dollar that made jobs go overseas, but the loose monetary policy of the FED. It posponed the crisis and allowed peole to keep consuming on credit while not working and improving productivity much. It promoted speculation instead of proper investment.

To export you have two options:

-Become a poor country that exports because it has cheap labor. (China at the beggining)

-Become a rich country that exports because its very efficient (Germany).

Wich one do you think the people would prefer?

[idiom]

The dollar weakening means labour is cheaper. Ditching the income tax would have the same effect.

[HOLLYWOOD]

Export don't matter when the production/industrial sectors have been dismantling for decades and recently collapsed. On top of we are a consuming nation, it will take years to produce, oh I know there are a few "grass shoots" here and there, but with both federal and state government bleeding the very people who produce, the graft of government, and the few destructive powerhouses (Banks/Insurance/Pharma/healthcare) fleecing the people via Washington, there's no fix to the current state without radical changes. Statistics are very manipulative and misleading: "Lies, More Lies, and Statistics" Mark Twain

A lot of government departments need to close and the spending, taxes, and regulations need to be dismantled and/or stopped.

When I read the title of this thread: Russia Dumps the U.S. Dollar for Euro as Reserve Currency

I first thought, oh the IRONY... wasn't it the United States that forced RUSSIA aka USSR in financial collapse?

Paybacks or should I say BLOWBACKS are a Bitch!