Russian investment in US government bonds fell by about $150 million in the month of May, freshly published data from the Treasury Department shows.
Russia’s portfolio, which amounted to $3.976 billion in March of 2021, dropped to $3.957 billion in April before ending up at $3.805 billion in May. The latter figure includes $3.5 billion in short-term treasuries, and $305 million in long-term securities.
Russia dropped out of the rankings of top holders of US debt in 2018, when it began selling off its mammoth $96+ billion in US debt holdings.
The continued cut in US treasury holdings follows the announcement by Russian authorities earlier this month that Moscow's once-hefty reserves of US dollars in the country’s National Wealth Fund safety cushion dropped to zero, with euros, yuans, Japanese yen and gold now accounting for 39.7 percent, 30.4 percent, 4.7 percent and 20.2 percent of the fund, respectively. Overall, the fund is valued at the equivalent of about $187.6 billion US.
In addition to cutting its dollar and treasury holdings, Russia has worked proactively to substantially reduce dollar-based trade with trade partners including China, India and Turkey as a means of protecting both sides from unilateral US restrictions. In 2019, Russian energy giant Rosneft, the world’s eighth largest oil and gas company by total revenue, and largest in terms of production volume and total reserves, completed a switch away from the dollar in favour of euros in export contracts.
Earlier this year, Kremlin spokesman Dmitry Peskov said he was confident that Russia’s move away from the greenback would eventually be emulated by other countries as they start to “doubt the currency’s stability and the stability of the country issuing it”.
US federal debt surpassed $28 trillion in March, with combined debt – which includes the national obligations plus all other public and private liabilities, reaching over $85 trillion – over four times the country’s annual GDP, or the equivalent of $256,800 for every man, woman and child in the country.