Foreign exchange reserves are essential for a country. They provide the much-needed buffer during economic shocks and help maintain the value of the local currency. Russia has a foreign exchange reserve worth $643 billion as of February 2022. Gold, Yuan, Special Drawing Rights (SDRs), International Monetary Fund (IMF), USD, and Euro are its major foreign reserves. In addition, Russia stores its Gold, which constitutes $223.8 billion of its reserves.
According to StockApps, Russia has faced a major blow after its biggest western allies sanctioned its Central Bank. As a result, the states blocked a total estimated $419 billion of Russia’s foreign exchange reserves. This value is based on the 2021 geographical and currency allocation.
StockApps financial analyst Edith Reads says, “In Mach 2022, Russia’s Western allies, including the EU, the US, the UK, and other states sanctioned Russia’s foreign exchange reserves. The sanction comes as an effort to cut off Moscow’s access to its foreign exchange reserves, which the Russian financial system relies on. The Russian financial system was forced to rely on foreign reserves after the suspension of major Russian banks from the global financial messaging system SWIFT.
Russia’s Foreign Exchange Distribution
In 2014, Russia faced the first blow when its Western allies sanctioned its significant banks and businesses. As a result, Russia opted for Gold (stored in Russia) as the main foreign reserves. Similarly, the Chinese Yuan was also given priority.
According to its latest report, out of the $643 billion in foreign exchange reserves, Gold and Yuan had the largest share of up to 35 percent. Gold and yuan amounted to $223.8 billion. Special Drawing Rights and International Monetary Fund reserves had a total of $29.3 billion shares, while USD, Euro, and other currencies amounted to $390.1 billion.
