Russia's Finance Ministry quintuples daily FX and gold purchases from 7 October
From 7 October to 6 November Russia's Finance Ministry will buy 279.42 billion rubles' worth of foreign currency and gold under the budget rule — 12.7 billion rubles a day, about five times September's pace — on the back of higher expected oil and gas revenue.
Russia’s Finance Ministry said on 5 October that it will spend 279.42 billion rubles on foreign currency and gold under the budget rule between 7 October and 6 November, Kommersant and Finmarket reported. That works out to 12.7 billion rubles a day, compared with 2.5 billion a day (55.6 billion in total) in the 7 September–6 October period — slightly more than a fivefold increase.
Where the money comes from
Under the budget rule, oil and gas revenue above a baseline level is set aside in reserves. The ministry expects additional oil and gas revenue of 289.46 billion rubles in October, AK&M reported. In September, actual oil and gas revenue fell short of the expected monthly volume by 10.04 billion rubles, an adjustment that is reflected in the new figure.
Net effect on the market
The Bank of Russia mirrors the ministry’s operations and also makes its own regular FX sales. Taking those into account, Finmarket calculated that the central bank’s net daily currency purchases on the market will rise to 12.12 billion rubles from 1.92 billion in the previous period. The US-based Institute for the Study of War, in its 6 October assessment, argued that the bigger purchases are likely meant to weaken the ruble and so help offset declining oil and gas export revenue; that is ISW’s analysis, not a stated aim of the ministry.
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