Russia was able to embark on its "3-day Special Military Operation" in the Ukraine because it had a massive National Wealth Fund (NWF) to cushion the blow of Western sanctions. This was made up of hard currencies, like the Euro (dark blue), the Pound (light blue), and the US dollar (green).
Before the war started in February 2022, it switched dollars for gold (yellow) and Chinese Yuan (red). It was then able to grow the NWF, due to soaring fuel prices, boosting its holding of Euros. But, from around January 2023, the fund rapidly shrank. The Kremlin was forced to liquidate it Pounds and Euros in order to keep the Russian economy afloat.
Now the NWF is worth around $55 billion, compared to $144 billion in the Summer of 2022. Also it is made up gold and Chinese currency, both of which have limited liquidity compared to the Western hard currencies it started out with.
Expect real economic pain to hit Russia after the fake Presidential election this month, followed by a switch to a more communist style command economy.
Before the war started in February 2022, it switched dollars for gold (yellow) and Chinese Yuan (red). It was then able to grow the NWF, due to soaring fuel prices, boosting its holding of Euros. But, from around January 2023, the fund rapidly shrank. The Kremlin was forced to liquidate it Pounds and Euros in order to keep the Russian economy afloat.
Now the NWF is worth around $55 billion, compared to $144 billion in the Summer of 2022. Also it is made up gold and Chinese currency, both of which have limited liquidity compared to the Western hard currencies it started out with.
Expect real economic pain to hit Russia after the fake Presidential election this month, followed by a switch to a more communist style command economy.
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