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Russia dumps $4.5 billion in U.S. bonds in 2 years

Russia dumps $4.5 billion in U.S. bonds in 2 years

Much has been said in recent years about the rise of a multipolar world and divestment from the United States, primarily through a block that may soon need a different acronym lest it becomes too long – BRICS.

While many consider it too early to call an end to the present global status quo, a level of separation from the American economy has been observable for some time, with few nations providing as stark an example as Russia.

Unsurprisingly, given the heavy sanctions and tensions arising from Russia’s 2022 invasion of Ukraine, the Eurasian giant has been reducing the amount of U.S. bonds it holds for multiple years and has, by late 2023, sold all but approximately $30 million of its American public debt.

Value of U.S. bonds held by Russia between Jan 2020 and Jul 2023. Source: Statista

Russia has been selling U.S. public debt for half a decade

What is more interesting is that the country’s policy of offloading U.S. treasuries without buying new ones dates back to before the COVID-19 pandemic. 

Indeed, 2018 arguably saw the biggest reduction as Russia offloaded more than 80% of its U.S. bonds, reducing the stake from $100 billion in December 2017 to less than $20 billion in May 2018.

Another major round of selling came in February 2020 when Russia reduced its holdings from approximately $12 billion to some $3.5 billion. While subsequent years saw some fluctuation, the invasion of Ukraine triggered the final reduction, halving the value of bonds held from $4 billion to $2 billion in 2022 and, by early 2023, to less than $100 billion.

Given the still-high tension and what appears to be the final moves before the seizure and repurposing of Russian assets during the first half of 2024, it is hardly strange that the Eastern European country has decided to reduce its involvement with U.S. debt.

Nonetheless, despite Russia’s severing from SWIFT, Nord Stream’s destruction, and heavy sanctions, a significant entanglement remains.

Not only are hundreds of billions in Russian assets frozen in the collective West, but also are approximately $300 billion of Western assets stuck in Russia and under threat of retaliatory seizure.

Not just Russia offloading bonds

Finally, while Russia may be the most dramatic example of a country offloading American public debt given the hot geopolitical situation, it is far from the biggest – and, arguably, far from the most concerning.

Recent months have seen numerous reports of China selling unprecedented amounts of U.S. bonds, the country offloading approximately $22 billion in the first quarter of 2024.

Simultaneously, the People’s Republic – considered a close ally of Russia and a foreign adversary by the United States – has been, much like numerous other countries around the world, significantly increasing its gold reserves.

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