Russia would retaliate for the seizure of money from Russian citizens and businesses abroad by seizing funds from foreigners and foreign businesses in Russia, Dmitry Medvedev, deputy head of the Security Council, said on Saturday, according to the RIA news agency.

According to Medvedev, Moscow does not rule out nationalizing the assets of companies registered in the United States, the European Union and other “hostile jurisdictions”.

Since the implementation of Western sanctions following Moscow’s annexation of Crimea in 2014, Russia has gradually reduced its dollar holdings, attempting to largely disconnect from the Western financial system.

According to BlueBay Asset Management’s Tim Ash, the action was intended to send a signal ahead of a June 16 summit between President Vladimir Putin and his US counterpart Joe Biden.

“We have decided, like the central bank, to reduce NWF’s investments in dollar assets,” Finance Minister Anton Siluanov said at the St. Petersburg International Economic Forum.

Following the adjustments, which should be completed within a month, the fund will store 40% of its assets in euros, 30% in yuan and 20% in gold. According to Siluanov, the Japanese yen and the British pound will each represent 5% of the total.

The dollar’s share will drop from 35% to 50%, while the pound’s share will be halved. For the first time, gold will be added to the NWF.

“The rest of the world has sharply reduced the dollar’s share of foreign exchange reserves over the past two decades, but Russia has a vested interest in doing so quickly and undermining global confidence in the dollar because it is a state oil and a strategic rival of the United States,” said Matt Gertken, geopolitical strategist at BCA Research in Montreal, in an email exchange.
“However, Russia is unlikely to completely purge its banking system of all dollars, as that would be a bad business decision.”

The ruble strengthened slightly on the news, while First Deputy Prime Minister Andrei Belousov said he did not expect the adjustment to change the exchange rate.

As of May 1, Russia’s NWF, which collects oil money and was originally intended to support the pension system, stood at $185.9 billion. It is part of Russia’s gold and currency reserves, which stood at $600.9 billion on May 27.

Russia’s central bank reduced its holdings of US Treasuries in 2018 and cut the dollar’s share of its gold and currency reserves in 2020 to 21.2% as of January 1, from 24.5% the last year. The central bank publishes this information six months later.