Russia liquidates investments in US debt holdings to near-zero as its investments in gold hit record high

Moscow / Washington: Russia which has been alleging against the United States of using the dollar like a weapon, has prepared to neutralise the American weapon. To achieve this, Russia has brought down its investments in the US Treasury bonds to almost zero and has instead increased its investments in gold. The Russian step has come as a huge jolt to the US dollar, which is one of the world’s reserve currencies. It evidently indicates Russia to have openly declared an economic war against the US, which has been imposing sanctions against Russia.

A gradual decline of investments in the US debt has been observed from countries like China, Japan, India and Turkey. Only last week, China had delivered a blow to the US dollar by selling off US sovereign bonds worth $3 billion. Also, China has been consistently selling off US security bonds in the last three months and it is considered as being the ‘warning shot’ against the Trump-initiated trade war.

Japan slashed its holdings in the US securities down to $1.029 trillion, making it a record-low since 2011. Turkey too has liquidated US Treasury bond investments in its foreign reserves by 42 per cent. Also, since March, India has been cutting down its US Treasury bonds for five successive months. As of August 2018, India’s holding of the bonds had gone down to $140 billion which in March, was valued at $157 billion.

Along with China, Japan, India and Turkey, Russia has also been observed to have sold off its US Treasury bonds in massive numbers. At the start of the year, Russia had investments of over $100 billion in US debt. However, it has been consistently liquidating the US Treasury bonds since the last few months in an attempt to bring it down to zero. Remarkably, Russia is said to have slashed its investments in the US debt down to $10 billion.

Concurrently, Russia is also adding to its gold reserves in large numbers. This year, the country has made gold purchases to the extent of 130 per cent in the first seven months alone. Even though Russia continues to buy gold, its exact figures have not been disclosed. Nevertheless, the country is said to withhold gold reserves close to 2000 tons. The gold levels in its foreign reserves have gone up by a record-high of 18 per cent.

Increasing the investments in gold in order to get rid of the US dollar is seemingly an important part of Russia’s anti-US policy. Russian President Vladimir Putin has candidly warned to reject the US dollar as the world’s reserve currency. Moreover, he also signalled at boosting the use of local currencies with friendly nations in cooperation with them. Russian politicians and officials have indicated the efforts were directed towards countering the constant US sanctions and is a part of its strategy in its economic war against the United States.

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