The ranking by the volume of gold and foreign exchange reserves (GFR) of countries in 2022, in which Russia took fourth place, reflects the fact that the Russian economy and the ruble are quite stable, despite the unfavorable geopolitical background. Natalia Milchakova, a leading analyst at Freedom Finance Global, told Izvestia about this on February 6.
The expert noted that any state needs gold and foreign exchange reserves. Thus, according to her, they can be used by the central banks of countries to finance the deficit of the balance of payments, payments on external debts, conduct foreign exchange interventions on the stock exchange to maintain the stability of the national currency, pay for the supply of imported goods and to pay off social obligations in case of urgent need.
“The more gold and foreign exchange reserves a country has, the higher the level of confidence of international investors in this country and its national currency. It is clear that a large amount of gold and foreign exchange reserves for Russia is of great importance,” she stressed.
At the same time, the analyst clarified that this is not the first time such a rating has been compiled, and the Russian Federation has been among the five largest countries in terms of gold and foreign exchange reserves for many years. So, in 2021, Russia ranked fifth in the world in terms of gold and foreign exchange reserves, losing the fourth position it held in 2020 to India. In 2022, Russia and India switched places in the ranking, and the Russian Federation returned to fourth place in terms of gold and foreign exchange reserves after the restrictions imposed against it.
“So in today’s conditions, although the rating is primarily of image importance for the country, today it reflects the fact that the Russian economy and the ruble are quite stable, despite the unfavorable geopolitical background,” Milchakova stressed.
At the same time, Freedom Finance Global analyst Vladimir Chernov explained that gold is stored within the country, so it cannot be frozen or arrested, unlike entries in the country’s foreign exchange reserves books.
“At the same time, against the background of the growth of the US dollar, global gold prices fell by 14% between January and November 2022, and now in 2023 they are expected to rise to all-time highs, and possibly even higher, when the Fed (Federal Reserve System. — Ed.) will begin to ease monetary policy,” he added.
The expert also said that in times of various economic or geopolitical crises, gold and foreign exchange reserves are usually reduced, but over time they need to be replenished.
“Therefore, in 2023, many will continue to increase their gold reserves in case of a “hard” global recession. <...> By the end of 2023, China will most likely remain the leader in the increase in gold reserves, since after the removal of most anti-COVID restrictions in the Celestial Empire, a noticeable increase in economic growth is predicted,” Chernov said.
In addition, the analyst believes that we can also expect a significant increase in the indicator in India.
Earlier that day, the RIA Novosti agency wrote that China, following the results of 2022, became the owner of the largest gold and foreign exchange reserves in the world for the 17th time in a row (at the end of December, the figure was $3.31 trillion), in second place is Japan ($1. 27 trillion), Switzerland is third ($924 billion), Russia is fourth ($582 billion), and India is fifth ($563 billion).
On February 5, it was reported that gold and foreign exchange reserves in the world in 2022 fell by $1 trillion. The stocks of Switzerland, Japan, and Singapore were depleted the most.
