June 10 (Bloomberg) -- Russia may switch some of its reserves from U.S. Treasuries to International Monetary Fund bonds, the central bank said today, driving Treasuries and the dollar lower.

Alexei Ulyukayev, first deputy chairman of Russia’s central bank, said some reserves may be moved from Treasuries into IMF debt, reiterating comments made last month by Finance Minister Alexei Kudrin.

“We plan to reduce the share of U.S. Treasuries, because a window of opportunity for working with other instruments is opening,” Ulyukayev said. As well as the IMF bonds, Russia could place more of its currency reserves on deposits with foreign banks, he said. His remarks were confirmed by a Bank Rossii official who declined to be named, citing bank policy.

Treasuries fell, pushing 10-year yields to the highest level since November, on the Bank Rossii statement and as the U.S. government prepared to sell $19 billion of the securities. The dollar declined versus most of its major counterparts as speculation the global recession is easing reduced demand for safety and after Ulyukayev’s remarks.

About 30 percent of Russia’s international reserves, which stood at $401.1 billion on May 29, are currently held in U.S. Treasuries, Ulyukayev said. Kudrin said on May 26 that Russia planned to buy $10 billion of IMF bonds using money from its foreign reserves. That investment would most likely be made in the fourth quarter, Ulyukayev said.

‘Face Value’

“As usual the market takes everything at face value and thinks everything will be implemented tomorrow,” Luis Costa, emerging-market debt strategist at Commerzbank AG in London, said by telephone. “I don’t believe this will be done on a significant magnitude over the next six to twelve months. It’s something they have in mind in the long term.”

Maxim Oreshkin, head of research at OAO Rosbank in Moscow, agreed that the shift into IMF debt won’t happen immediately.

“The central bank has never stood out for making fast moves with its reserves,” Oreshkin said. “If it changes certain groups it will happen smoothly.”

Oreshkin said investing in the IMF could bring “political dividends” for Russia, as it “raises the role of Russia in the IMF.”

Russian President Dmitry Medvedev questioned the U.S. dollar’s future as a global reserve currency last week and said that using a mix of regional currencies would make the world economy more stable. He renewed his call for consideration of a supranational currency to challenge the dollar.

Dollar Concerns

The dollar “is not in a spectacular position, let’s be frank, and its prospects cause various questions as do the prospects for the global currency system,” Medvedev said in an interview published in the Kommersant newspaper.

The IMF securities would give countries a different way to contribute to the fund and are unlike traditional bonds because they pay an interest rate pegged to the IMF’s basket of currencies, known as Special Drawing Rights.

China is expected to buy as much as $50 billion of the bonds, IMF Managing Director Dominique Strauss-Kahn said yesterday.

The IMF, which has rescued economies from Pakistan to Iceland in the past year, has never issued bonds before and is seeking more cash to finance loans and aid to member countries during the worst economic slump in the fund’s 64-year history.

To contact the reporter on this story: Alexander Nicholson in Moscow at anicholson6@bloomberg.net

Last Updated: June 10, 2009 09:37 EDT