Russia’s net FX interventions to be near zero in April

7:07 am Wednesday, April 03rd, 2024

MOSCOW (Reuters) – Russia’s finance ministry said on Wednesday it would more than double its purchases of foreign currency and gold in the month ahead, a move that combined with central bank selling will bring the state’s net forex interventions overall close to zero.

The finance ministry said it would buy the equivalent of 235.3 billion roubles ($2.6 billion), or 11.2 billion roubles per day, of foreign currency and gold from April 5 to May 7.

The central bank conducts forex interventions on the finance ministry’s behalf. Meanwhile, the central bank is also selling forex to compensate for money spent from Russia’s rainy-day wealth fund in 2023.

As a result, the Russian state overall will remain a net forex seller in April – just at a much lower volume than in the previous month, with overall sales diving to 0.6 billion roubles from 7.1 billion roubles a day.

In the March 7-April 4 period, the ministry had planned to buy foreign currency worth 93.7 billion roubles, while analysts surveyed by Reuters had predicted purchases totalling 117.5 billion roubles.

Under its own budget rule, Russia sells foreign currency from its National Wealth Fund to make up for any shortfall in revenue from oil and gas exports, or makes purchases in the event of a surplus. The ministry said it was increasing its purchases in part thanks to higher than expected income tax receipts.

Proceeds from oil and gas sales for Russia’s federal budget rose to 1.3 trillion roubles in March from 945.6 billion roubles in February, ministry data showed.

In April, the ministry expects additional energy revenues for the budget of 128.3 billion roubles above its current plan.

This year, the central bank’s mirroring of finance ministry operations, including deferred foreign currency purchases from August to December 2023, is being adjusted by the volume of NWF funds spent on financing the government’s budget deficit for 2023 and on supporting companies.

The central bank deferred foreign currency purchases last August to avoid aggravating pressure on the rouble, which tumbled past 100 to the dollar in August and October.

The ministry was selling Chinese yuan for the first half of 2023 as Western sanctions imposed over Russia’s actions in Ukraine hit energy revenues. It reverted to purchases in August as commodity prices rose and energy revenues recovered.

($1 = 92.4050 roubles)

(Reporting by Darya Korsunskaya and Alexander Marrow; Editing by Kevin Liffey and Hugh Lawson)