Russia to decrease daily forex sales in coming month

Russia’s finance ministry said on Wednesday it would sell 1.7 billion roubles’ ($18.9 million) worth of foreign currency a day between July 7 and Aug. 4, a decrease in the volume of daily operations from the previous month.

After a hiatus of several months, 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 Western sanctions.

The finance ministry said its regular FX sales on the market would total 34.9 billion roubles over the coming month. Analysts surveyed by Reuters had predicted sales would total 57 billion roubles.

In the previous period, between June 6 and July 7, the ministry had planned to sell 74.6 billion roubles’ worth of foreign currency to compensate for lower oil and gas revenues.

The government carries out forex interventions to cover shortfalls – or build up reserves in the event of a surplus – in earnings from Russia’s vital oil and gas exports, revenues from which have shrunk this year due to Western sanctions.

The finance ministry said June’s oil and gas revenues were 30.3 billion roubles below plan. It said it expected a 4.5-billion-rouble shortfall from federal energy revenues in July.

Reduced revenues and soaring spending pushed Russia’s Jan-May budget deficit to 3.41 trillion roubles, already 17 per cent higher than the target for all of 2023, creating fiscal pressure as Moscow continues its military offensive in Ukraine.

($1 = 89.8350 roubles)