The Russian Minister of Finance, Anton Siluanov, recently announced that 20% of the assets of the National Wealth Fund (NWF), the Russian public pension fund, will be invested in gold. Within the next couple of weeks Russia will change the structure of the NWF’s investment portfolio, entirely removing the US dollar, halving the share of the British pound and shifting to the euro, the Chinese yuan and gold.
Due to a combination of a deteriorating relationship with the US and the growth of Asia, Russia has been looking to increase its trade and finance relationships with China and the rest of the region. The asset allocation structure of the NWF reflects these changing dynamics and includes an increased role for the renminbi.
An increased allocation to gold has been part of Russia’s de-dollarisation policy for some time. The Bank of Russia acquired 1,911.7t tonnes of gold between 2006 and 2020 and, having gradually withdrawn from the USD over the last couple of years, has increased the proportion of gold in its reserves to about 23% in 2020, a level higher than that of the USD. The NWF has been reducing its dollar holdings since the beginning of the year, and now, following a change in the legislation, it will move 20% of its assets in gold – a share comparable to that in the central banks’ portfolio.1 As a result, gold, next to the EUR and the RMB, will become one of the three main assets in the NWF portfolio (Chart 1).
Chart 1. The new structure of the NWF portfolio
% of NWF assets to be allocated to gold and foreign currencies