Putin says no plans to reject dollar but risks should be stemmed

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JOHANNESBURG (Reuters) – Russia has no plans to reject the U.S. dollar, even though Washington has undermined trust in its currency by using it as an argument in political disputes, Russian President Vladimir Putin said on Friday.

Russia’s President Vladimir Putin speaks during a news conference following the BRICS summit in Johannesburg, South Africa July 27, 2018. Sputnik/Alexei Nikolsky/Kremlin via REUTERS

“Russia is not rejecting the dollar … We are not planning to make any sudden moves,” Putin said, when asked if Russia plans to decrease its holdings of the U.S. currency in its reserves.

Putin addressed the question on the dollar days after data showed Russia has ditched its holdings of U.S. Treasuries in the past few months amid further deterioration of relations between Moscow and Washington.

“We have been using it and will use it to the extent the U.S. financial authorities allow for,” Putin said about the dollar, speaking at a news conference at the BRICS summit in South Africa.

A U.S. Dollar note is seen in this June 22, 2017 illustration photo. REUTERS/Thomas White/Illustration

Putin said, however, that Russia should minimize risks related to sanctions and “unlawful restrictions”.

Since 2014 Russia has been under financial and economic sanctions imposed by the West over Moscow’s annexation of Crimea and its role in the Ukrainian crisis. The United States has stepped up the sanctions to punish Moscow for its alleged meddling in the U.S. election. Russia denies any interference.

With nearly $460 billion in state reserves, the Russian central bank has been increasing the share of gold and the Chinese yuan in its coffers amid risks of more sanctions that could target Russia’s ability to trade globally.

“We understand such risks and we are trying to minimize them,” Putin said, referring to risks of sanctions.

Putin also said the United States “undermines trust in the dollar as the reserve currency” by imposing restrictions on settlements in dollars.

“This prompts dozens of countries consider other options,” Putin said, adding that the Chinese yuan is now obtaining more of the qualities required for the role of reserve currency.

Reporting by Denis Pinchuk; Writing by Andrey Ostroukh; Editing by Alison Williams

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