Russia’s holdings of U.S. government securities fell by 20 percent in March as the U.S. and Europe stepped up pressure against Russia and as analysts said the nation’s central bank tried to shore up the value of the ruble.
Russian holdings declined for a fifth straight month, to $100.4 billion from $126.2 billion in February, according to figures released today by the Treasury Department in Washington. The department doesn’t provide explanations for the moves.
“Some of these Russian holdings might have been used for intervention” to support the currency, said Gennadiy Goldberg, a U.S. strategist at TD Securities USA LLC in New York. “It’s also possible that they simply shifted them from holding them under their own name to a custodial account in Belgium.”
The U.S. has frozen the assets of 45 individuals, including OAO Rosneft Chief Executive Officer Igor Sechin, and 19 entities, such as SMP Bank and Bank Rossiya, in response to Russia’s annexation of Crimea. The Obama administration and its European allies have threatened broader economic penalties, with the U.S. pointing to the banking industry as a possible target.
The Russian currency has lost more than 5 percent this year against the dollar, making it the worst performer among emerging markets after the Argentine peso. The monetary authorities were probably selling Treasuries to obtain dollars to buy rubles, analysts said.
Belgian holdings of Treasuries rose $40.2 billion, or 12 percent, to $381.4 billion in March. The European country is the third-largest foreign holder of Treasuries, following China and Japan, according to today’s data.
“Russia most likely shifted their holdings to another custodial, with the highest probability being Belgium,” said Sebastien Galy, a senior currency strategist at Societe Generale SA in New York.
Russia’s first-quarter economic growth slowed to the weakest in a year as the standoff against the U.S. and its allies over Ukraine shrivels up investment.
Gross domestic product advanced 0.9 percent in January-March from a year earlier after a 2 percent gain in the previous quarter, the Moscow-based Federal Statistics Service said in an e-mailed statement, providing its first estimate of first-quarter GDP. That was above the 0.7 percent median estimate of 19 economists in a Bloomberg survey. The Economy Ministry had projected that output expanded 0.8 percent.