Russia to sell US Treasuries, eyes IMF bonds

MOSCOW: Russia's Central Bank says it plans to cut reserves it holds in U.S. Treasuries and invest in International Monetary Fund bonds instead, a senior official said Wednesday.

Roughly 30 percent of Russia's $400 billion worth of hard currency reserves are currently held in U.S. Treasuries.

``We are planning to gradually reduce the share of U.S. treasuries as a window of opportunity for working with other instruments is opening, and the situation with foreign banks has become clearer,'' Alexey Ulyukayev said in comments quoted by the state-run RIA Novosti news agency.

Ulyukayev said that Russia would instead invest in IMF bonds and place its money in bank deposits. IMF bonds are denominated in special drawing rights, an artificial currency used by the IMF.

Russian officials have expressed concern about the dollar's role as an international reserve currency for several years and President Dmitry Medvedev has even argued that the ruble should serve as a regional reserve currency because the dollar is too unstable.

Russia is merely trying to diversify its risks with the move, analysts said, adding that even if it were to try to give up the dollar it would fail.

``The main thing we export is commodities, and all commodity markets are dollar-denominated,'' said Yulia Tsiplyaeva, chief economist at Merrill Lynch in Moscow. ``The only thing Russia can do is diversify its foreign exchange reserves.''

Alfa Bank's chief strategist Ron Smith said Russia ``does not need to go against the dollar,'' which is still the chief global currency.

``They need to spread the risk out,'' he said. ``They've been doing some diversification for the past several years measuring everything against the dollar-euro basket.''

Ulyukayev's annoucenment follows remarks by Chinese officials advocating a shift away from the dollar as an international reserve currency and expressing worries about a fall in the dollar due to large U.S. budget deficits and monetary expansion.

The announcement comes just a week before BRIC nations _ Brazil, Russia, India and China _ gather in Russia's Urals city of Yekaterinburg for talks. BRIC leaders are widely expected to discuss alternatives to the dollar as the global reserve currency.

Russia earlier said it would buy up to $10 billion worth of IMF bonds with money from its foreign reserves.