Russia to Drastically Reduce Deferred FX Purchases
Decreased Volume of Deferred Foreign Currency Purchases
Russia’s finance ministry announced plans to significantly reduce the volume of deferred foreign currency purchases in the coming month by more than 2-1/2 times, totaling 244.8 billion roubles ($2.68 billion).
Reason for Deferred Purchases
The central bank halted foreign currency purchases until the year’s end to prevent further pressure on the rouble, which plummeted past 100 to the dollar in August and September, resulting in the deferred purchases.
Deferred Purchases
The finance ministry revealed that it would defer its foreign currency and gold purchases, totaling 11.7 billion roubles per day, for the period from Dec. 7 to Jan. 12.
Comparison with Previous Period
In the previous period, the ministry had planned to purchase foreign currency worth 621.1 billion roubles, highlighting the substantial decrease in the upcoming month.
Budget Rule and Currency Sales
Following its budget rule, Russia sells foreign currency from its wealth fund to compensate for any revenue shortfall from oil and gas exports or makes purchases in the event of a surplus.
Revised Currency Interventions
The central bank announced that currency interventions on the domestic market would resume in January with an adjusted formula to support the rouble, factoring in the difference between deferred interventions and the volume of rainy day fund spending on financing the government’s budget deficit for 2023.
Impact of Sanctions and Commodity Prices
The ministry has been selling foreign currency as Western sanctions over Russia’s invasion of Ukraine affected energy revenues. It has also purchased FX as commodity prices rose, and energy revenues recovered.
Oil and Gas Revenues
The ministry estimated excess oil and gas revenues in December at 362 billion roubles, noting a decline in energy revenues from 1.635 billion roubles in October to 961.7 billion roubles in November.
($1 = 91.3625 roubles)
