While addressing the World Economic Forum on Wednesday evening, Russian Prime Minister Vladimir Putin offered the following thoughts on the state of the global reserve currency system:
“The one reserve currency has become a danger to the world economy: that is now obvious to everybody.”
He also argued that the leading powers should ensure an “irreversible” move towards a system of multiple reserve currencies, while questioning the “reliability” of the USD as a safe store of value.
Why could that be? Could it have anything to do with Russia’s own depleting foreign exchange reserves?
As RBC Capital highlights, Thursday’s been another day of rouble weakness. Leading the drive lower was news that Russian forex reserves fell no less than $9.7bn in the week ending Jan 23. As they explain:
In aggregate reserves are down more than USD211bn from their August 2008 peak, to USD386.5bn. Despite FX intervention the RUB basket is now trading at 39.75, having lost more than 5% in the past two days. As the new lower trading band approaches (at 41.00), speculation is mounting that the authorities will be forced into a further devaluation of the currency.
Related links:
Rouble float likely? – FT Alphaville
Russia devalues the rouble, again - FT Alphaville