INTERVIEW-Russia could invest in EFSF in 2011 if liquid enough

Published 03/28/2011, 06:45 AM
Updated 03/28/2011, 06:48 AM
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By Elena Fabrichnaya

MOSCOW, March 28 (Reuters) - Russia may invest some of its $500 billion reserves in the bonds of the European Financial Stability Facility (EFSF) this year if the bonds prove sufficiently liquid, a senior central banker told Reuters.

"If we see that it is sufficiently liquid, we will consider it as an investment instrument," central bank deputy chairman Sergei Shvetsov said. "Yes, it is possible already this year."

Unlike the Finance Ministry, the central bank does not need any changes in the law to invest in the EFSF paper, he said.

Russia -- which holds the world's third-largest reserves after China and Japan -- currently does not have any investments in Spanish bonds after all its holdings matured, but does not rule out such investments in the future, Shvetsov said.

"Spain has a suitable rating. The situation is difficult today, and thus we do not have such investments. But that does not mean that we have renounced investment in Spanish sovereign debt for good," he said.

The Finance Ministry this month added Spain back to the list of possible investments for its National Welfare Fund, managed by the central bank as part of the reserves.

It had excluded Spain from its list of permissible investments at the height of the euro zone debt crisis last autumn, along with Ireland, which remains off limits.

Shvetsov reiterated that Russia has no plans to reduce its holdings of Japanese yen in the forex component of its reserves from the current 2 percent.

The Canadian dollar, which was added to the reserves last year as part of a long-term diversification strategy, accounts for "slightly less" than the yen. Russia still plans to add the Australian dollar to its reserves in the future but not this year, he said.

Gold holdings in the reserves is currently worth $36 billion, and Shvetsov said their value would probably continue to rise as overall reserves grow -- even if gold's percentage share may remain unchanged.

Shvetsov also told Reuters on Monday that Russia would continue to widen the rouble's floating trade corridor. (Writing by Toni Vorobyova; Editing by Susan Fenton)

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