Russia is likely to resume buying foreign currency for its reserves as early as May amid stabilization of public finances due to rising oil revenues. Bloomberg writes about it.
According to the agency, the Ministry of Finance may announce this this week. Initial purchase volumes may be equivalent to approximately two hundred million yuan dollars per month. As Bloomberg notes, the Chinese currency is the main asset that Russia can still use to conduct transactions for its $154 billion Wealth Fund.
The resumption of foreign currency purchases will emphasize Russia's ability to maintain the flow of petrodollars in the face of sanctions and oil price ceilings set by Western countries, the agency notes. Despite the tense situation due to military spending and, as before, an extremely high deficit, the Russian budget is stabilizing, the agency states.
"The volume of purchases of foreign currency will initially be small, but highly symbolic, as they will demonstrate that Russia, instead of absorbing its reserves, is increasing them," Bloomberg quotes Russian economist Oleksandr Isakov. In addition, the accumulation of reserves, according to experts, can have a positive effect on the ruble.
In January, after an almost year-long break, the Bank of Russia decided to resume operations with foreign currency within the framework of the budget rule. It is about buying currency at relatively high oil and gas revenues and selling at low ones. Currently, such operations are not conducted with the currencies of "unfriendly countries" - the dollar and euro, but with Chinese yuan. In turn, this allows changing the relationship of the ruble to the dollar and the euro through cross rates. At the beginning of the year, the Ministry of Finance increased the sale of yuan due to the decrease in the price of Russian oil after the price ceiling was set at $60 per barrel.
In response to the Russian military invasion of Ukraine in February 2022, the Western countries froze almost half of Russia's gold and foreign currency reserves: 300 billion of funds in the dollar equivalent of 640 billion.
