NEWSLINK: Russia says plans no switch out of euro reserves

November 29, 2012 JRL Russia List Politics, Government, Protests, Elections

(Russia says plans no switch out of euro reserves – Reuters – John Irish – Nov. 27, 2012 – http://www.reuters.com/article/2012/11/27/us-russia-forex-idUSBRE8AQ0ND20121127)

Reuters covers Russian plans to continue having foreign exchange reserves having almost as many Euros as U.S. Dollars:

Russia has no plans to switch euro-denominated foreign exchange reserves into other currencies as Moscow believes the euro zone situation will improve, Prime Minister Dmitry Medvedev said on Tuesday.

Russia’s central bank has the world’s fourth-largest currency reserves, and as of January this year 42 percent were held in euros and 45 percent in U.S. dollars, with the rest in currencies like sterling, yen and Canadian dollars.

Speaking during a visit to Paris, Medvedev said he had every intention of maintaining the proportion of euros as he was confident the euro zone would find a way out of its debt crisis.

“We have no intention of reallocating them … Despite the problems (in the euro zone) we think it will get better,” he told a joint news conference with French Prime Minister Jean-Marc Ayrault.

The comments came after euro zone finance ministers and the International Monetary Fund agreed to reduce Greece’s debt, which removes the biggest risk of a sovereign default in the euro zone for now.

The statement signaled that Russia might be backing away from past indications by its central that it might diversify more regarding foreign currency reserves:

Russia’s central bank has signalled in the past that it could diversify its forex reserves by adding other currencies such as the Australian dollar, which would mean changing the respective shares of the other assets it holds.

In May, however, Medvedev told Russia’s partners in the Group of Eight industrialised nations that it would not reduce its share of euro reserves as it did not want to send the wrong signal about the situation in Europe.

Russian gold and forex reserves stood at $522.2 billion last week.

“Russia is strongly linked to the European Union and so it’s in our interest to have a stable Europe,” he said speaking through an interpreter.

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Another issue coming up is an apparent Russian to desire to invest in EADS and other Western European concerns:

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One area that could interest Moscow was increasing its five-percent stake in Europe’s largest aerospace group EADS .

The ownership structure has been in the spotlight since the planned merger with BAE Systems drew a veto from Germany and sped up efforts by Berlin to play a more direct role in EADS, matching that of France.

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Russia, through a state-owned bank, is the largest single investor outside the core group of European Union countries that control the firm.

In 2006, when it bought the stake, there were concerns it might seek a seat on the board, a move seen as unacceptable by Paris and Berlin, which are both keen to ensure the firm is not vulnerable to outside influence.