MOSCOW -- The Russian Central Bank said on Monday about $100 billion of its reserves were invested in the securities of U.S. agencies, including home finance firms, at the end of 2007, with the majority in short-term paper.
The disclosure was made via a central bank filing to parliament at a time when investments of wealthier emerging countries are under international scrutiny. A poll earlier this year showed a majority of Americans fear the U.S. economy and national security could be hurt if sovereign wealth funds put more money into U.S. companies.
In Russia, previous central bank statements about investments in the United States have outraged some politicians, prompting the bank to explain it was putting money in securities and not shares, and was posting no losses despite financial market troubles.
A steep drop in U.S. home prices which sparked a crisis among risky borrowers has since tainted all types of mortgages. Russian banks have little exposure to U.S. mortgage-backed securities.
The Russian central bank, which has the world's third largest reserves of $530 billion, said the share of investments in securities of U.S. agencies, including Fannie Mae and Freddie Mac, soared to 2.475 trillion roubles last year from 1.007 trillion in 2006.
Story Continues Below
The rouble, which has appreciated substantially over the past few years, had an average rate of 25.57 per dollar in 2007 and 27.18 in 2006. The bank said over four fifths of the paper had maturities of less than one year.
Fannie Mae and Freddie Mac, the largest and second largest U.S. providers of residential mortgage funding, have reported heavy losses and their stock prices have fallen sharply.
Russia's central bank has been investing in quasi-sovereign paper for many years. It does not invest in stocks.
Apart from Fannie Mae and Freddie Mac, the central bank can also invest in securities of U.S. Federal Home Loan Banks and Federal Farm Credit Banks and quasi-sovereign bonds from Britain, France, Germany, Spain, Austria, Canada and the Netherlands.
The bank says it is a long-term investor and no portfolio adjustment would ever lead to sharp market moves, be it U.S. Treasury bonds or quasi-sovereign papers.
© Reuters 2008. All rights reserved. Republication or redistribution of Reuters content, including by caching, framing or similar means, is expressly prohibited without the prior written consent of Reuters.
Editor's note:
The Coming Oil Price Crash Could Make You a Fortune
U.S. Recession Could Devastate Commodity Prices.
20 Financial Institutions Most at Risk From Mortgage Meltdown
Max Shows You How to Profit From $100 Oil
