Alexey Vedev: Russia is destined to have significant foreign exchange reserves

Russia has moved up to the 6th place in the world in terms of foreign currency reserves, pushing Saudi Arabia down to the 7th place in the world ranking. Alexey Vedev, Head of the Financial Studies Department at the Gaidar Institute, told MK.RU in a commentary why we have overtaken Saudi Arabia and how the world ranking will affect the Russian economy.

According to the World Gold Council, Russia's foreign exchange reserves at the end of 2023 amounted to $442 bn. The Russian Federation has displaced Saudi Arabia in terms of currency reserves and now ranks 6th in the world. This was largely due to the new approach of the Arabs - they started keeping less money in their central bank and allocating more to national development funds. Russian currency reserves are now replenished with yuan, the total amount of which is 8 times higher than imports from Russia, which is a confirmation of the country's financial stability. However, it is worth noting that reserves of $300 bn have been frozen under Western sanctions and cannot be used.

According to Alexey Vedev, Russia's exports have consistently exceeded imports for the past 30 years. Accordingly, it is simply destined to have significant foreign exchange reserves, just like many other "net exporters," primarily Germany, Japan, China, Norway, and Saudi Arabia. However, according to the expert, the current situation cannot be called normal and stable: since spring 2022, Russia has been forced to replenish its reserves almost exclusively at the expense of yuan due to sanctions and freezing of $300 bn. The total amount of $442 bn does little for the economy, as most of these funds cannot be used. The same is true of gold as part of the gold reserves, which (despite its safety) has limited liquidity.