Markets Fear Russia Has Cut US Treasury Bill Holding Over Ukraine Crisis

Markets fear Russia has cut US treasury bill holding over Ukraine crisis (Guardian, March 14, 2014):

Transfer of more than $100bn out of US prompts speculation Russia is moving funds out of reach of possible sanctions

Financial markets were on high alert last night over the Ukraine crisis amid speculation that the Kremlin had pulled its vast US treasury bill holdings out of New York.

News that more than $100bn had been shifted out of the US in the past week – at least three times more than at any time since the financial crisis – prompted fears that Russia is preparing for a western backlash in the form of sanctions and is moving its funds to safe havens beyond US influence.

The bills were transferred out of the US central bank’s deposit vaults last week, as the Obama administration increased the threat of sanctions in response to the growing crisis in east Ukraine. Last year the most moved in a week was $32bn. Analysts said that if the switch can be credited to Russia, it represents about 80% of the country’s holdings in US Treasury bonds.

The Russian central bank is likely to be behind the move, though wealthy Russian business figures are also expected to be concerned that Washington-imposed sanctions will freeze funds they have parked with the US central bank. Alexei Miller, the boss of energy firm Gazprom, and Igor Sechin, who runs oil company Rosneft, are likely to be among the many senior figures in Moscow adversely affected by any targeted sanctions imposed on Russia.

The switch came to light after the US central bank reported that its weekly custody holdings of Treasury bonds – investments it keeps on behalf of outside investors – dropped $105bn for the week ending 12 March to $2.85tn from $2.96tn.

1 thought on “Markets Fear Russia Has Cut US Treasury Bill Holding Over Ukraine Crisis

  1. For the one thousandth time…..Russia, China and Japan have all been divesting themselves of US debt since 2010. Russia and China have been doing it methodically every month once it became apparent the US would do nothing to clean up its markets or punish those who destroyed the world economy. The US lost its hard won credibility, and the fools in power were too stupid to realize how valuable that was……now, it is all gone.
    Japan started selling off US debt after Fukushima because they need the money at home. Their debt level now exceeds 200% of GDP because many of their exports are returned due to high radioactive content. They say nothing about it.
    If one goes to usdebtclock.org, and clicks on “world”, the data are there.
    With the advent of electronic currencies which render the entire idea of a world reserve currency obsolete, the US has been losing financial power dramatically. The dollar was involved in every international transaction in Jan, 2010. Today, it is less than half, and it continues to drop as more nations prefer to use their own currencies.
    The US government is now sitting on piles of paper currency nobody wants. The FED carries the majority of US national debt because other nations no longer invest here. The US literally loans money to itself……but as the world has less need or interest in the dollar, it is losing value rapidly.
    People at home are starting to really feel it, and that, I think, is the real story…..the crashing of the US dollar is upon us.

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