The Central Bank's reserves of gold and foreign currency jumped $10.9 billion last week, the biggest weekly gain since just before the default of 1998, the bank said in a statement Thursday.
Total reserves reached $332.6 billion on March 23, after the Central Bank helped Rosneft change $22 billion in foreign loans into rubles. Rosneft had taken out the loans from Western banks to bid for Yukos assets, the first of which -- Yukos' 9.44 percent stake in Rosneft -- it scooped up for $7.6 billion in an auction Tuesday.
Analysts said the sudden release of rubles to Rosneft would not impact the local currency market, as the cash will be isolated to the Yukos sales, the second of which will take place April 4. Eventually Rosneft will return the loans to foreign banks, without letting their value drive up inflation by recycling the cash through the economy.
Only China's $1.07 trillion cash hoard and Japan's $905 billion trump Russia's reserves, which have ballooned over the past eight years as export revenues, mainly from oil and gas, have allowed the state to set aside a large cash pile.
Aside from stuffing the coffers of the Central Bank, this cash has allowed for the creation of the stabilization fund, which now stands at more than $100 billion. More than half the growth of the Central Bank's reserves currently gets funneled into the stabilization fund, away from the pet projects of politicians.
"The overall stabilization is perhaps the most significant economic achievement of [President Vladimir] Putin's administration as a whole," said Vladimir Tikhomirov, senior economist at UralSib.
The reserves have ushered in a period of unprecedented macroeconomic stability. Last summer, they allowed Russia to pay back the $21 billion owed to the Paris Club, and brought its total debt to less than 10 percent of GDP, leaving plenty of room to borrow in case of crisis.
Some experts, however, felt that the state could have been quicker in putting the reserves to use.
"In managing the reserves, which have really become very large, we give Russia a 'B' rather than an 'A' in the sense that there has been no clear investment strategy until the beginning of last year," said John Litwack, head of the World Bank's office in Russia.
Earlier this month, Putin announced a plan to divide the stabilization fund after it reaches $125 billion into a "fund for future generations" and a reserve fund.
"If these funds are invested wisely, it will bring a huge return. Just the interest will be a large source of budgetary income," Litwack said.
The government has not made clear how the funds will be used.
