Why does Russia need investments in US securities?

Why does Russia need investments in US securities?

Over the period from January 2015 to January 2016, Russia has increased the volume of its investments in securities of the US government by 14.7 billion dollars, from 82.2 billion dollars to 96.9 billion dollars, the monthly report of the US Treasury Department about investments of money resources of other countries in US government bonds for January states.

According to the US Treasury, in June of last year Russian investments in such securities amounted to 72 billion dollars, in July – 82.1 billion dollars, in August – 89.9 billion dollars, in September – 89.1 billion dollars, October – 82 billion dollars, in November – 88 billion dollars, and in December – 92.1 billion dollars. Meanwhile, in October and November of 2014 these figures amounted to 108.9 billion dollars and 108.1 billion dollars.

Thus, the volume of Russian investments began to significantly decline from December 2014, when this figure already amounted to 86 billion dollars.The trend changed in May last year, when this figure increased to 70.6 billion dollars from 66.5 billion dollars in April, TASS reports.

Russia continues to hold 15th place in a long list. China remains the biggest holder of US government securities, its investments in January reached 1.237 trillion dollars. Japan is in second place after China with 1.123 trillion dollars. At present, foreign countries hold US securities amounting to 6.183 trillion dollars.

Vestnik Kavkaza asked experts why Russian financial institutions continue to invest in American securities, despite the US economic aggression against Russia.

As the chairman of the National Currency Association (NCA), Dmitry Piskulov, noted in an interview with the agency, it all started a long time ago, when the state currency reserves management system, which is controlled by the Bank of Russia, was formed.

"This is being done so that reserves would bring income, and not just do nothing. Therefore, it is established practice, which has existed for a long time. In fact, it has an economic nature: it cannot be directly linked to military and political rivalry. America is not our official enemy – the press just interprets it like that. We have disputable issues, but at the same, we also have cooperation," Dmitry Piskulov noted.

Associate Professor of the stock markets and financial engineering department of RANHiGS, Vasily Yakimkin, in turn, explained that Russia invests in US securities not for reasons of financial profitability, because in regard to US government bonds it approaches zero, but for maintenance of corporate debt.

"Although it is decreasing, still, today it is still great – a little less than 500 billion dollars. For its maintenance, we have to take loans, and since Western banks do not give them to us, we switched to the Asian region. However, it also requires guarantees. And the most marketable, ensuring instruments, are US Treasury bonds," he explained.