Russia’s large foreign exchange reserves could pose a problem for financial markets.

Russia holds vast foreign exchange reserves, much of which is held overseas, which could upset currency markets.

The country had international reserves totaling $630 billion at the end of January, including $467 billion in foreign currency and $132 billion in gold. The rest consists of special drawing rights (SDRs) and IMF reserves, according to data from the Bank of Russia.

With the country’s invasion of Ukraine on Thursday, a critical question is how much of those reserves are outside of Russia.

Credit Suisse strategist Zoltan Pozar crunched the numbers to determine exactly that. The figure obtained by using data from the Bank of Russia with that of the financial markets was that 300 billion dollars are held abroad, according to the report.

Pozar estimates that about $200 billion is held in swap deals with another $100 billion in offshore bank deposits, more than enough to cause a shift in funding markets.

If things get worse, it’s hard not to see a direct impact on FX swaps and US dollar Libor pegs given Russia’s vast financial surpluses and where those surpluses are deployed, he said. he declares.

On Thursday, the Bank of Russia announced emergency measures to maintain financial market stability, including by intervening in foreign exchange markets.

The markets are probably hoping that the mountain of cash does not turn into an erupting volcano.