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Putin Gambles on the Euro?

Vladimir Putin, amateur economist, has given a big interview to AFP ahead of a two-day trip to France in which he speaks at length about Russia’s support for the European economy and its trust in the long-term value of the euro:

“We trust and believe” in the euro, Putin told AFP in an interview this week in the southern Russian Black Sea resort city of Sochi.

“We would not hold such a huge amount of our currency reserves in the European currency if we did not.” (…)

“In my view, there exist no objective conditions for the fall of the euro,” said Putin. (…)

“Yes, there are some difficulties. I am certain they are only temporary.” (…)

“And this confirms yet again that we have no plans to change our relationship to the Euro as a reserve currency and in its proportion of our reserves.”

Such statements make for good politics, but also contrast with this commentary on the euro as a reserve currency from Marc Chandler of BBH:

“Russian data out in the middle of last month showed an increase in dollar holdings (44.5% vs. 41.5% at the end of 2009) and a decrease in euro holdings (43.8% from 47.5%) However, valuation shifts likely account for the bulk of the change. In the first four months of the year the euro was the worst performing among the G10 currencies, falling about 7.2%. And two other currencies that Russia may hold in reserves, the Australian and Canadian dollars were the strongest in the first third of the year, appreciating about 3% and 3.5%, respectively.”