Russia keeps faith in U.S. debt, sees default being averted

Reuters

MOSCOW (Reuters) - Russian policymakers expressed confidence on Wednesday that U.S. lawmakers would resolve a debt impasse, saying they viewed Treasury bonds as the world's safest investment even in the event of a technical default.

Finance Minister Anton Siluanov told reporters that Russia would not be affected if the U.S. Congress fails to raise a debt ceiling by an October 17 deadline because it holds no short-dated U.S. government securities.

"I hope that both sides will find a way to agree," said Siluanov, who chaired the Group of 20 finance talks in Washington last week. "For us there will be no consequences even in the event of a default."

Russia holds more than two-fifths of its foreign reserves in U.S. Treasuries. The central bank's total gold and forex holdings are just over $500 billion, making them the world's fifth largest behind China, Japan, Saudi Arabia and Switzerland.

Ksenia Yudayeva, first deputy chairwoman at the Russian central bank, described the risk of a U.S. default as very low. "We think that taking the situation to a critical level is a highly unlikely scenario," she said.

"U.S. Treasuries will remain the safest asset in the world even in the event of a U.S. technical default," she said.

To deal with any market volatility that may result from a U.S. technical default, the Russian central bank would roll out its standard range of liquidity measures, Yudayeva said after she and Siluanov testified before a parliamentary committee.

"There would be an increase in volatility on markets. This event is, on the one hand, extraordinary. But in recent years such extraordinary events have happened repeatedly," said Yudayeva, who oversees the bank's market operations.

"The central bank has a large range of instruments to support liquidity. We now have an exchange rate corridor to restrain exchange rate movements. As such, we are prepared for the situation and have a selection of instruments to hand."

(Reporting by Darya Korsunskaya and Oksana Kobzeva; Writing by Douglas Busvine; Editing by Pravin Char)

View Comments (16)