In March, the country bought $13.5 billion of US government bonds — better known as “Treasury securities.” Russia’s total holdings of US debt have now increased to nearly $100 billion, according to recently released Treasury Department data.
It’s the third straight month of buying from Russia.
A key reason is that Russia is restocking its foreign reserves, which declined dramatically when oil prices crashed last year to their lowers level since 2003.
Foreign reserves are the cushion a country builds up to weather a rainy day.
When the price of oil started to crater in late 2014, Russia’s economy and currency went down with it. US and European economic sanctions against Russia didn’t help its economy either.
The ruble’s crash could have been worse had the Russian government not spent lots of its US dollar holdings to keep the currency afloat.
Before oil prices crashed, Russia’s debt holdings hovered around $150 billion. They fell to $66.5 billion in 2015.
Oil prices are up to nearly $50 a barrel today and the ruble has found a second wind too, up 14% in the last 12 months.
With calmer seas, Russia can afford to restock its reserves.
“Higher oil prices have allowed them to buy those dollars they used to prop up the ruble,” says Win Thin, head of emerging market currency strategy at Brown Brothers Harriman.
Most countries hold their currency reserves in US Treasury bonds since they’re considered one of the safest investments in the world.
Thin and other experts argue that Russia could have more US reserves in offshore accounts in tax havens like Switzerland, the Cayman Islands and Luxembourg, all of which have far more US holdings than Russia.
“You could easily make a case that the holdings are twice what’s being reported,” says Thin.
But it’s impossible to know for now exactly how much US debt Russia owns.
The official figure — $100 billion — isn’t a staggering amount. China and Japan each own over $1 trillion of US debt.