Russia’s multi-year push to remove the dollar’s hold over its economy and financial markets has so far helped ease the impact of sanctions from the U.S. and its allies, even as they roll out tougher measures that could test the extent of a true de-coupling from the greenback.
The nation slashed its dollar reserves to just 16% of the central bank’s stockpile in 2021, down from more than 40% just four years prior. That’s meant aggressively hacking its holdings of U.S. Treasuries, shrinking ownership by almost 98% from a peak in 2010 and removing dollar assets from its sovereign wealth fund.
These moves will now help insulate Russia from some of the worst fallout of escalating U.S. and European sanctions after President Vladimir Putin began a full-scale invasion of Ukraine. While sanctions so far prevent the nation from tapping international investors, with the U.S. prohibiting new purchases in the secondary market from March, efforts to make Russia less dependent on the dollar could blunt their impact and potentially buy Putin time to withstand even more stringent sanctions, at least for a while.