We all know that Japan and China are the Big Players in propping up the dollar. We might not appreciate the role of other smaller but still important players which also "dirty float" against the USD like Taiwan or Korea -- or Russia.
According to the Central Bank of the Russian Federation, between December 31, 2000 and November 12 of this year the country's foreign exchange reserves more than quadrupled, from $28.0bn to $113.1bn, making Russia the largest player in the (in)formal dollar bloc outside Asia. Since the dollar began sliding in January 2002, the Russians have socked away $76.7bn in reserves.
Thus news that Russia is starting to abandon the dollar is really something to watch.
Speculation that Russia was altering its foreign exchange regime to give greater weight to the euro helped drive the single currency higher early in the session.
Russia's central bank later told Reuters the euro will play a greater role than the dollar in its foreign exchange targeting as trade volumes with Europe had increased.
"If there's a suggestion that they need to buy euros, it is bad news for the dollar," said Ian Gunner, head of foreign exchange research at Mellon Financial Corporation.
The central bank also said the proportion of its foreign exchange reserves held in euros has risen to 30 percent from 10 percent two years ago, backing up recent market speculation that the central bank has been buying euros.