October 1, 2022

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Russia says nearly half of its reserves are frozen, and is dependent on ties with China

Russia says nearly half of its reserves are frozen, and is dependent on ties with China

Written by Mark Trevelyan

LONDON (Reuters) – Russia said on Sunday it was counting on China to help it weather the blow to its economy from Western sanctions, which it said have frozen nearly half of its gold and foreign exchange reserves.

We have a portion of our gold and foreign exchange reserves denominated in Chinese yuan. We see what pressures Western countries exert on China in order to limit trade exchange with China. “Of course there is pressure to limit access to those reserves,” Finance Minister Anton Siluanov said.

“But I believe that our partnership with China will continue to allow us to maintain the cooperation that we have had, and not only maintain it, but also increase it in an environment where Western markets are closed.”

Western countries have imposed unprecedented sanctions on Russia’s corporate and financial system since it invaded Ukraine on February 24 in what it called a special military operation.

Siluanov’s comments in a TV interview represented the clearest statement yet from Moscow that it would seek help from China to mitigate the impact.

The two countries have strengthened cooperation recently as both have come under strong Western pressure on human rights and a host of other issues.

Russian President Vladimir Putin and Chinese President Xi Jinping met in Beijing on February 4 and announced a strategic partnership that they said was aimed at countering the influence of the United States, describing it as friendship without borders.

Sanctions on Russian reserves have become one of the most painful measures for the Russian economy.

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A month ago, Siluanov said Russia would be able to withstand sanctions thanks to ample reserves, and was even considering offering international bonds to foreign investors once market volatility subsided.

On Sunday, he said the sanctions have frozen about $300 billion of Russia’s $640 billion in gold and foreign exchange reserves.

Siluanov also said that Russia will fulfill its government debt obligations and will pay rubles to debt holders until the state reserves freeze is lifted.

(Editing by Susan Fenton)