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Putin hedges Trump bet by dumping Treasuries to safeguard assets
By Anna Andrianova, Evgenia Pismennaya, and Olga Tanas
Friday, July 20, 2018
Russian officials are hoping Vladimir Putin's rapport with Donald Trump will lead to rapprochement with the U.S. But they're not taking any chances.
A U.S. Treasury report this week appears to show Russia liquidating dollar assets at a record pace, selling four-fifths of its cache of U.S. government debt, $81 billion worth, over a two-month period. It started in April, when the U.S. imposed the most onerous sanctions yet on allies of Putin.
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The release caused a stir in the markets because neither the Treasury nor the Bank of Russia will comment on the transactions. And the data is murky, so it's hard to know if Russia actually offloaded the bulk of its U.S. assets or simply transferred custodianship to a foreign entity to disguise ownership.
But for Sergey Dubinin, Russia's central bank chief from 1995 to 1998, there's no mystery at all -- the sales were simply a prudent "hedge" against confiscation, a possibility that looks more likely every day. Russia, he said, has learned from Iran's experience and is converting its dollar assets into other currencies to safeguard its reserves against any attempts at seizure.
"It would be silly to sell U.S. debt and then keep it in dollars somewhere else," said Dubinin, who's now on the supervisory board of state-run VTB, Russia's second-largest lender. "They most likely bought other hard currencies like euros and yen." ...
Putin has long railed against "the dollar monopoly," even referring to the U.S. as a "parasite" for "living beyond its means." In May, after he was sworn in for a fourth term, Putin went further and called for a "break" from the dollar to bolster the country's "economic sovereignty." ...
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