Russia boosted gold reserves by the most since defaulting on local debt in 1998, driving its bullion holdings to the largest in at least two decades.
The country expanded its stockpile, the world’s fifth-biggest, by 37.2 metric tons in September to 1,149.8 tons, according to data on the International Monetary Fund’s website. The increase, valued at about $1.5 billion, was the biggest since November 1998. Russian reserves, which overtook those of Switzerland and China this year, almost tripled since the end of 2005 and are at the highest since at least 1993, the data show.
A weakening ruble in the face of currency interventions is stoking speculation the Bank of Russia will accelerate its switch to a free float. The country, which defaulted on $40 billion of local debt in August 1998, is draining reserves as tumbling oil prices and U.S. and European sanctions over President Vladimir Putin’s intervention in Ukraine worsen the ruble’s losses and dollar shortage. Gold prices slid the most in 15 months in September.
“From the perspective of a sovereign which is concerned about aspects of geopolitical risk, it makes sense that they would have a bias toward physical gold,” Brian Lucey, a finance professor at Trinity College Dublin and formerly an economist for the Central Bank of Ireland, said today by phone. With lower gold prices, Russia may have viewed it “as good a time as any to pick it up,” he said.
via Bloomberg 
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