(Bloomberg) — Russia has already lost access to almost half of its reserves and sees more risks to President Vladimir Putin’s war chest due to increased pressure from the West on China, said Finance Minister Anton Siluanov.

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“The total volume of our reserves is about $640 billion, and about 300 billion are in such condition that we can’t use them now,” he told state television in an interview on Sunday.

“We see what pressure Western countries put on China” to limit access to reserves in yuan, he said. “But I think our partnership ties with China will let us not just preserve it but expand it.”

The asset freeze on Russia’s central bank was imposed as part of a series of economic penalties to punish Moscow for the invasion of Ukraine, now into its third week. Russia’s own data published in January shows that $100 billion of the reserves were held in U.S. dollars as of June, which was 16.4% of total cash pile at that time. Holdings in euros were 32.2% and those in yuan at 13.1% at the end of June 2021.

China has vowed to continue normal trade relations with Russia, which is seen as a strategic partner, despite a corporate exodus by many European and U.S. firms. China’s move to double the yuan trading band for the ruble showed little sign of boosting activity in the pair, with liquidity tightening further on Friday.

Repay Debt

Russia will repay debt in rubles until its cash pile is unfrozen, Siluanov said. The Bank of Russia introduced capital controls after its foreign reserves were frozen by international governments. The restrictions have raised the prospect of the nation’s first debt default since 1998.

Russia’s war on Ukraine has inflicted a domestic toll that’s already comparable to the worst downturns of President Vladimir Putin’s more than two decades in power. An economy that was on track to expand this year swung into reverse in a matter of days. Bloomberg Economics’ initial forecast is for Russia’s full-year GDP to slump about 9% in 2022.

The central bank will also keep the Moscow Exchange stock market closed until at least March 18, extending a record shutdown meant to shield domestic investors from the impact of harsh sanctions over Russia’s invasion of Ukraine.

Siluanov vowed to continue to aid Russian banks that are in a difficult situation. Current level of reserves allow even those banks to function “that have become the subject of the harshest sanctions,” he said.

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