Russia To Boost Gold, Foreign Reserves To $500 Billion Over Next Few YearsBy Kitco News
Thursday June 04, 2015 17:10
(Kitco News) - The Russian central bank has been a major purchaser of gold bullion, and that trend does not appear to end any time soon.
According to media reports, Elvira Nabiullina, chairwoman of the central bank, said the plan is to increase its foreign reserves to around $500 billion in the next few years, from the current level of $357 billion.
“In optimal conditions, reserves should be enough to cover considerable capital outflows for two to three years,” she said. “The increase in reserves should be gradual and solely in a way that doesn’t contradict monetary policy goals, particularly reducing inflation to 4 percent in the medium term.”
In 2014, the central bank sold off almost a quarter of its foreign reserves in an effort to prop up the ruble, which hit record lows late in the year. The ruble was hit hard last year as a result of considerable lower oil prices and harsh global economic sanctions as result of Russia annexing the Crimean region from Ukraine.
Even as the central bank was selling parts of its reserves last year, it continued to accumulate gold bullion. However, it is unclear how much gold will be bought in order to increase the country’s total foreign reserves by about $145 billion in the coming years.
According to Bloomberg, in a press briefing after the conference, Nabiullina said that the central bank purchases will be done smoothly and over an extended period, limiting market impact.
“We’ll carry out operations depending on the situation on the currency market, and the parameters of the operations can vary,” she is quoted as saying in the Bloomberg article.
In 2014, according to the World Gold Council (WGC), the Russian central bank led the world in gold purchases, buying 173 tonnes. That trend has continued with the central bank buying 300,000 ounces of gold in April, according to a Reuters’ article, May 26.
The article noted that as of May 1, Russia's gold reserves rose to 40.1 million troy ounces, compared to 39.8 million reported the previous month.
According to the WGC, Russia’s gold reserves represent more than 13% of the nation’s total foreign reserves.