Central Bank Says It's Happy to Hold U.S. Mortgage Bonds

The Central Bank holds several percent of its $484 billion gold and forex reserves in securities in U.S. home finance firms and is happy with the investment, the bank's first deputy head, Alexei Ulyukayev, said Friday.

Ulyukayev retracted his earlier statement that the bank was suffering losses on the investments in bonds of Fannie Mae and Freddie Mac.

"There are no losses. We are not investing in mortgage-backed securities, we are investing in government agency bonds," he said on Ekho Moskvy radio.

Ulyukayev said Thursday that the Central Bank was suffering certain losses as a holder of securities in U.S. home finance firms.

"We have our investment portfolio and we have Fannie Mae and Freddie Mac securities. ... Because we have those securities in our portfolio, the drop in quotes is affecting us and we post losses," Ulyukayev told reporters. Answering a question on the size of the investment, he said, "I can't say it is insignificant."

Ulyukayev has been reported making several controversial statements this year, including suggestions for giving priority to liquidity over inflation or introducing wage growth controls. He said his statements were misreported. Vedomosti ran a front-page headline Friday that read "Central Bank Affected by Mortgage Crisis."

The Central Bank, which manages the world's third-largest gold and forex reserves, has been investing in quasi-sovereign paper for many years.