March 12, 2020 / 1:06 PM / 25 days ago

UPDATE 1-Russian gov't proposes letting sovereign fund invest in Chinese yuan

(Adds details, background)

MOSCOW, March 12 (Reuters) - Russia’s National Wealth Fund (NWF) could be allowed to invest in Chinese state debt and in yuans, according to a draft government resolution published on Thursday, a move which would enable a diversification of the country’s cash cushion.

The NWF, a rainy-day fund made up of oil revenues accumulated over the years, is part of Russia’s sovereign reserves and held 8.2 trillion roubles ($110.5 billion), or 7.3% of the country’s growth domestic product as of March 1.

Russian Finance Ministry officials have said the country will reduce the share of the U.S. dollar in the fund - which also contains euros, pounds and roubles - and that it was considering investing in other currencies including the yuan.

Deputy Finance Minister Vladimir Kolychev said last year that the move was meant to shield Russia’s reserves from external risks and would make the fund’s composition closer to that of the central bank’s foreign currency reserves.

In recent years Russia has stepped up what it calls a de-dollariSation process to reduce its dependence on the U.S. currency as its relations with the West have soured over Moscow’s annexation of Crimea in 2014 and its role in the Ukrainian crisis. ($1 = 75.0928 roubles) (Reporting by Maria Kiselyova and Gabrielle Tetrault-Farber; editing by Mark Heinrich)

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