MOSCOW, Russia - January 20, 2010 - Russia’s central bank announced on Wednesday that it had started buying Canadian dollars and securities in a bid to diversify its foreign exchange reserves.

Analysts said the move could be a sign of increased diversification of emerging market central bank assets away from the dollar and into investments denominated in other commodity-linked currencies, such as the Australian dollar.

Adam Cole at RBC Capital Markets said if taken in isolation, Russia’s announcement that it was buying Canadian dollars was not significant, but if it was part of a broader trend, then it was an important step.

“If it is a barometer for the activity of other central banks, then it is structurally positive for the currencies of countries like Canada and Australia that have a commodity bias in their economies,” he said.

Although not officially confirmed, traders said that other emerging market central banks, including some in Asia, which hold large foreign exchange reserves, have also been active in the foreign exchange market in recent weeks buying both Canadian dollars and Australian dollars.

Alexei Ulyukayev, first deputy chairman of Russia’s central bank, said that it would invest in Canadian dollar-denominated deposits and bonds.

“The Canadian financial market is not very deep, so we can invest in deposits in significant volumes, while the bond market is limited,” he said.