The Russian Finance Ministry said on Friday it would sell 8.9 billion roubles ($126.6 million) worth of foreign currency a day between Feb. 7 and March 6, an almost three-fold increase in the volume of daily operations from the previous month.
After a months-long hiatus, Russia resumed foreign currency interventions in January, selling yuan rather than what it terms “unfriendly” Western currencies, underscoring the growing importance of China’s currency in Moscow’s efforts to ensure economic stability amid sanctions.
The finance ministry said its regular FX sales on the market will total 160.2 billion roubles ($2.28 billion) over the coming month – the highest level of FX sales for the last three years, according to analysts at BCS Express. A Reuters survey of analysts had predicted they would total 79.75 billion roubles.
Between Jan. 13 and Feb. 6, the ministry had planned to sell 54.5 billion roubles worth of yuan, to compensate for lower oil and gas revenues.
Russia halted FX interventions last year as Western nations imposed sweeping sanctions against Moscow, included the freezing of about $300 billion in foreign exchange reserves, after it launched what it calls its special military operation in Ukraine.
The government carries out FX interventions to cover shortfalls – or build up reserves in the case of a surplus – in earnings from Moscow’s vital oil and gas exports.
The finance ministry said it received 52.1 billion roubles ($741 million) less in revenue on oil and gas sales in January than it expected, citing lower export duties on gas during the month.
Analysts at MKB Investments, a Moscow-based brokerage, said on Friday if the price for Russian oil sales does not increase, the government could face a budget deficit equivalent to 3.8 per cent of GDP this year – or almost double the level envisaged in the government’s current spending plans.
In Russia, where the dollar was king for years following the collapse of the Soviet Union in 1991, the yuan has become a major player since Moscow sent tens of thousands of troops into Ukraine last February.
Russia’s finance ministry cannot conduct transactions in dollars and euros, citing the Chinese yuan as the only alternative.
($1 = 70.31 roubles)