The euro's share in Russia's forex reserves, the world's third-largest, overtook that of the dollar last year as the country pressed on with a gradual diversification, the Central Bank's annual report showed.

The euro's share increased to 47.5 percent as of Jan. 1 from 42.4 percent a year ago, according to the report, which was submitted to the State Duma on Monday.

The dollar's share fell to 41.5 percent from 47 percent at the start of 2008 and 49 percent at the start of 2007.

Concern about countries allocating a greater share of their reserves in currencies other than the dollar has been one of the factors weighing on the greenback in recent years.

Sterling's allocation in Russia's reserves was broadly steady at 9.7 percent of the cash pile, while yen holdings rose to 1.3 percent from 0.8 percent, the report showed.

Russia's gold and forex reserves stood at $427 billion at the start of 2009, having been depleted by roughly a third in five months by interventions in the currency market in a bid to keep ruble depreciation under control.

In line with other global reserve managers, Russia has taken a more cautious approach with its investments in the face of the global financial crisis.

"In the second half of 2008, due to the global financial and economic crisis and against the backdrop of liquidity problems on external financial markets, the credit risks linked to the Bank of Russia's activity in managing forex reserves have increased," the Central Bank said in its report.

The regulator said it had reduced the maximum length of deposits on which reserves are placed, giving no more details. It has also reduced credit limits for counterparties on the external market and limited the list of counterparties for deposits on the external market.

Russia has also been gradually increasing holdings in gold and has banned investment in bonds of agencies such as Fannie Mae and Freddie Mac, saying it needed more liquid assets to meet the needs of its own budget.

The report showed that 10.8 trillion rubles ($336.8 billion) of Central Bank investments were in foreign bonds.

Of that, the debt of European issuers accounted for 6.5 trillion rubles, U.S. issuers made up 4.06 trillion rubles, yen-denominated Japanese bonds 150 billion rubles and bonds of international organizations 120 billion rubles.

The Central Bank has previously said it keeps more than 30 percent of its reserves in U.S. Treasuries.