Russia's central bank decided to start buying Canadian dollars on Wednesday, in an direct snub to both the precarious euro and dollar.
The market for the Canadian dollar is nowhere near the size of other major currency markets, so one imagines that if other central banks catch on in force, it could be great news for the loonie.
FT: Although not officially confirmed, traders said that other emerging market central banks, including some in Asia which hold large foreign exchange reserves, have also been active in the foreign exchange market in recent weeks buying both Canadian dollars and Australian dollars.
Alexei Ulyukayev, first deputy chairman of Russia’s central bank, said that it would invest in Canadian dollar-denominated deposits and bonds. “The Canadian financial market is not very deep, so we can invest in deposits in significant volumes, while the bond market is limited,” he said.
Although the central bank did not specify how much of its reserves it was allocating to assets denominated in the Canadian dollar, analysts estimated that the central bank could put up to $9bn, or 2 per cent, of its foreign exchange reserves into the currency.
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Ahead of Wednesday’s announcement, Russia’s foreign exchange reserves were evenly split between dollar and euros.
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See Also:
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