Russia has begun its previously stated plan to buy Canadian dollars, adding credence to the loonie's status as a second-tier reserve currency.

Russia has been adding loonies to its vast foreign currency reserves. (Canadian Press)

"We have added the Canadian dollar but haven't yet begun operations [with the currency]," said Alexei Ulyukayev, deputy chairman of Russia's central bank, Bank Rossii, was quoted as saying in Moscow on Tuesday by Bloomberg.

Russia's foreign currency reserves are the world's third-largest, at $458.2 billion US. It's not known exactly how many loonies Russia has bought, but at this point it's certainly much less than one per cent of their total holdings.

U.S. dollars account for the plurality of Russia's holdings, 47 per cent, followed by 41 per cent in euros, 10 per cent in British pounds and two per cent in Japanese yen.

Russia's move to diversify its reserve base is likely more influenced by a desire to be less dependent on the U.S. dollar and euro (both of which have been volatile for months) than any interest in Canada specifically.

Russian President Dimitri Medvedev recently called for a global currency, going as far as producing a prototype coin in July 2009.

But the country has already started buying loonies, and they are not alone, BNP Paribas analyst Sebastien Galy told CBC News recently. China, with its vast $2.3 trillion US currency reserve, is also believed to be actively hoarding loonies, although to what extent is not known.

"We are absolutely sure that it is happening, [but] the total quantity of these things is a bit hard to trace," Galy said.

Long considered too volatile to act as a reserve currency due to its close tie with the volatile price of oil, a lot has changed to make the loonie a legitimate — albeit second-tier — global reserve.

"The reason behind it is credibility on the fiscal side," Galy said. "[The Bank of Canada] cut rates first and it normalized its situation before anyone else."

Individual foreign investors appear to be acting similarly. In the last 15 months, foreigners have gobbled up more than $100 billion in Canadian dollar-denominated bonds, Statistics Canada said recently.

"The central banks and the real money have all made the same decision: Canada is relatively safe and a great investment," Galy said.

Canada's economy represents roughly 2.8 per cent of the world's total economic output.

"As a percentage of total exposure it's not that big, but for Canada it's very important because it's a lot of people putting small amounts of money into Canadian dollars," Galy said.

Foreign interest in Canada's dollar will buoy the future value of the loonie.