Russia says plans no switch out of euro reserves

PARIS Tue Nov 27, 2012 10:57pm IST

Russia's Prime Minister Dmitry Medvedev (R) leaves as French President Francois Hollande enters the Elysee Palace following a meeting in Paris, November 27, 2012. REUTERS/Philippe Wojazer

Russia's Prime Minister Dmitry Medvedev (R) leaves as French President Francois Hollande enters the Elysee Palace following a meeting in Paris, November 27, 2012.

Credit: Reuters/Philippe Wojazer



PARIS (Reuters) - Russia has no plans to switch euro-denominated foreign exchange reserves into other currencies as Moscow believes the euro zone situation will improve, Prime Minister Dmitry Medvedev said on Tuesday.

Russia's central bank has the world's fourth-largest currency reserves, and as of January this year 42 percent were held in euros and 45 percent in U.S. dollars, with the rest in currencies like sterling, yen and Canadian dollars.

Speaking during a visit to Paris, Medvedev said he had every intention of maintaining the proportion of euros as he was confident the euro zone would find a way out of its debt crisis.

"We have no intention of reallocating them ... Despite the problems (in the euro zone) we think it will get better," he told a joint news conference with French Prime Minister Jean-Marc Ayrault.

The comments came after euro zone finance ministers and the International Monetary Fund agreed to reduce Greece's debt, which removes the biggest risk of a sovereign default in the euro zone for now.

Russia's central bank has signaled in the past that it could diversify its forex reserves by adding other currencies such as the Australian dollar, which would mean changing the respective shares of the other assets it holds.

In May, however, Medvedev told Russia's partners in the Group of Eight industrialized nations that it would not reduce its share of euro reserves as it did not want to send the wrong signal about the situation in Europe.

Russian gold and forex reserves stood at $522.2 billion last week.

"Russia is strongly linked to the European Union and so it's in our interest to have a stable Europe," he said speaking through an interpreter.

Medvedev also met French President Francois Hollande after seeing Ayrault, the first meeting of an intergovernmental commission since President Vladimir Putin and Hollande assumed office in May and Medvedev and Ayrault took up their posts.


The meeting aimed to improve relations between the countries. Medvedev has accused France of setting up administrative barriers for Russian investors, often viewed in the West with suspicion over the origins of money earned during a wave of controversial privatizations in the 1990s.

He said there was a huge imbalance in the amount of money each country was investing into the other. France had poured about 9 billion euros in 2011 into Russia, versus just 130 million euros worth of Russian investments into France.

"We must do everything to ensure that business is reciprocal between our countries," he said.

One area that could interest Moscow was increasing its five-percent stake in Europe's largest aerospace group EADS EAD.PA.

The ownership structure has been in the spotlight since the planned merger with BAE Systems (BAES.L) drew a veto from Germany and sped up efforts by Berlin to play a more direct role in EADS, matching that of France.

Medvedev did not rule out examining its stake in the future.

"It's a subject that can be discussed," he said, adding that those involved would have to see how the structure evolves.

Russia, through a state-owned bank, is the largest single investor outside the core group of European Union countries that control the firm.

In 2006, when it bought the stake, there were concerns it might seek a seat on the board, a move seen as unacceptable by Paris and Berlin, which are both keen to ensure the firm is not vulnerable to outside influence.

(Reporting By John Irish; Writing by Vicky Buffery; editing by Stephen Nisbet)

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