Russia restructuring its social fund

RUSSIA / FSU POLITICS - In Brief 13 Nov 2019 by Alex Teddy
On November 13 the Ministry of Finance announced that the National Wealth Fund (NWF) would be restructured. The Deputy Minister of Finance said that the time is ripe for this transition. Currently the NWF holds 45% of its funds in USD, 45% in EUR and the rest in GBP. The objective is to mitigate geopolitical risk.On November 1 2019 the NWF has USD 45.4 billion which is equivalent to 46% of the whole of the NWF. The Ministry of Finance is deciding what currency to include as the % of USD in the NWF is reduced. RMB is the obvious candidate. The move shall be made in close concert with the Central Bank.In the Central Bank's reserves USD comprises 23.6% of the total. EUR makes up 30.3%. Other currencies include GBP, JPY, RMB, AUD, and CAD.Prime Minister Medvedev recently said that US policy is weakening confidence in the USD. Moving away from USD comes at a cost. Bloomberg estimated that in October 2019 Russia lost about USD 7.7 billion by shifting to weaker currencies such as EUR. When the USD gained value rapidly Russia lost out on this.

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