The country's share in treasury bills has declined by more than 80 percent since March. For many years Russia has been one of the largest holders of US Treasury bonds, but over the past six months the situation has changed dramatically. Since March, Russia has significantly reduced its reserves from $ 96.1 billion to $ 14.9 billion in May, which means that it is no longer among the top 10 American lenders.
Russia's total investment in US bonds has almost returned to the mid-2007 level ($ 14.7 billion). Elvira Nabiullina, head of Russia's central bank, said the sell-off was part of an effort to diversify the country's international reserve portfolio.
“Over the past 10 years, we have increased our gold and foreign exchange reserves by almost 10 times,” she said. "We are diversifying our foreign exchange portfolio … we assess all risks, including financial, economic and geopolitical."
Experts believe that the move was a response to the April US sanctions against Russia, which were aimed at the Russian business elite and large corporations such as Renova Group and Rusal.
“This is primarily a political decision,” said Sergei Suverov, senior analyst at BKS. “The central bank held about 30 percent of its assets in US Treasury bonds and has always been criticized for this. Therefore, given the US sanctions, the move to reduce the reserves in dollar assets looks more than logical."
Treasury bonds are US government bonds with a fixed interest rate that matures over 10 years and pays interest every six months. Countries usually buy US bonds to manage their trade deficits with the US by reinvesting dollars that are spent on buying US goods and services.
