protestor dollar gag
© Agence France-Presse / Jewel Samad
Practice shows that there are three topics connected to Moscow that attract genuine attention, and often also invoke the sincere surprise of the foreign financial press and expert community.

The main mystery that the authors of the western financial periodical press try to solve is why the Russian economy hasn't yet collapsed, despite unprecedented western sanctions? If it continues like this, then the meme about the "mysterious Russian economy" will occupy in the western news sphere a place near a meme about the "mysterious Russian soul".

One more topic moving the world is the Russian successes in relation to intercepting control over the OPEC oil cartel, which the Americans once created to advance their own interests. Now American journalists sadly joke that it is time to rename OPEC into ROPEK, because now it is Russia - which (oh the horror!) doesn't react to the tweets of Trump demanding to immediately lower the prices of oil - that rules here.

It is impossible to not mention the topic of the Russian gold reserves and the persistence with which the Central Bank buys gold for gold and foreign exchange reserves. Taking into account with the amount of this metal in its own stocks Russia already overtook even China, western analysts suspect that this strategy is a part of strengthened preparation for the collapse or radical reformatting of the world monetary system, after which gold will be the only "financial instrument" that not only keeps its value, but also raises it.

It is very probable that last week there were events that can add one more sensitive issue for discussion to this list. After the publication of the latest data of the American Treasury Department, experts collectively search for the reasons for why Russia in April (this is the last month that data from the American Treasury Department is available for) got rid of half of its portfolio of American governmental bonds.

While Russian fans of everything western joyfully rub their hands together and speak in the style "you see, the market didn't even notice the liquidation of half of the Russian portfolio", others coldly note that this same liquidation suspiciously coincided with the falling of prices of American bonds, i.e., the market noticed everything, and was able to digest the sale of bonds for $47.4 billion.

Some Russian media emphasised that the American Treasury Department doesn't give a breakdown according to the status of the owners of bonds, specifying only their total amount in every country, and hint that perhaps not all sales accounted for the Russian Central bank.

However, there are the grounds to believe that all or nearly all the sales volume accounted precisely for the Russian Central Bank, and not some other Russian holders of bonds. Judging by the statistics of the US Federal Reserve, it is in precisely in April of this year that there was a drop in the number of bonds that keep foreign central banks on the accounts of the Federal Reserve. This can be considered as indirect, but strong proof that it is exactly the liquidation of half of state Russian portfolio of American bonds that took place.

The most interesting thing in this story is that the dollar assessment of the Russian gold and foreign exchange reserves for April increased by $1.3 billion. I.e., the narrative that bonds were sold to urgently patch some financial hole is absolute groundless. The American bonds were sold, and the received means were invested in some other assets.

The central bank publishes its reports on the management of reserves with a big time lag, and we will learn the exact answer to the question "what assets were the received dollars invested in" approximately in half a year, but it is possible to consider some possibilities already now.

The most conservative scenario: the dumping of American bonds (perhaps, even full dumping, because there isn't any data for May yet) was done to minimise the risk of their confiscation due to American sanctions. Of course, an attempt to confiscate (or "freeze") the Russian portfolio of the American bonds would cause enormous damage to the American financial markets and the ability of the US Treasury Department to borrow money to cover the growing budget deficit. But Trump's administration already repeatedly demonstrated a certain contempt for common sense and long-term risk management, so from this point of view the liquidation of a part or all the portfolio of American bonds was justified.

If it acts only as a defensive measure, then on the balance of the Central Bank there will be other dollar assets, but which, most likely, are stored outside of American jurisdiction and are perhaps controlled through some "layer" like the Euroclear system. An alternative option: the Central Bank invested in dollar financial instruments issued by non-American issuers, however to find such a considerable volume of "non-American" dollar instruments is quite problematic.

Social networks and in the media discuss the narrative that the money from the sale of American bonds went on supporting "RUSAL" - a victim of sanctions, and concretely - the repayment of its dollar debt obligations, but here there is a mathematical problem. In order to repay even all the existing debts of "RUSAL" there is no need to sell American bonds for $47 billion, because $8.5 billion would be more than enough for this. By the way, such a scheme could be considered as an investment or a form of "soft nationalisation", but in this case something more large-scale in its conception is obviously being observed.

But the most radical and least probable scenario: the ratio of currencies in the Russian gold and foreign exchange reserves underwent serious revision, and the proportion of dollar assets was significantly reduced due to the sale of American bonds and the purchase of securities in other currencies - most likely, in Euros. It is precisely such a scenario that represents the greatest interest from the point of view of western analysts, some of who see these Russian financial manoeuvres as a rehearsal of similar actions made by the People's Republic of China.

Such prospects become twice interesting in the context of the obvious failure of the American-Chinese negotiations over preventing a trade war, in which the Chinese portfolio of American bonds can be quite used as the financial equivalent of a nuclear weapon. If Moscow has suspicions or is confident that Beijing will take such radical measures, then the fast sale of the Russian package of American bonds is a way of returning their money before the People's Republic of China strikes a blow to the American financial market. If it is indeed this that explains such radical actions made by the Central Bank, then it is possible to be glad for its foresight and hope that the most serious consequences of the world trade war in the format "all against all" will nevertheless miss us.

Via ria.ru