Russia: FX Purchases Up In April, Largely Neutral For Ruble, But Other Risks Matter

Russian FX purchases will increase to US$2.4bn in April – slightly higher than expected but still modest compared to the current account size. A change in the FX structure of the sovereign fund is also unlikely to affect the local market. Meanwhile, this does not remove risks to the ruble coming from the capital account.

Monthly FX purchases keep growing along with oil prices

The Russian Finance Ministry announced an increase in monthly FX purchases from US$2.0 billion in March to US$2.4bn in April (Figure 1), higher than the US$2.1bn Reuters consensus, but closer to our expectations of US$2.2bn. The increase in the fiscal-rule FX purchases, which will be conducted by the Central Bank of Russia on the market, is in line with the further US$3/bbl growth in average Ural price in March. Meanwhile, the actual purchases would have been higher but for the downward revision in the March fuel revenues, hinting at a possibility of another negative surprise in terms of current account surplus after the February disappointment. But overall, the April FX intervention announcement is generally in line with the relative neutrality of oil prices for the ruble's performance. Year-to-date, the ruble is down 1% against the US dollar despite a 23% increase in the oil price.

Figure 1: Monthly FX purchases keep growing along with oil prices

Source: Finance Ministry, Refinitiv, ING 

Change in FX structure of the sovereign fund is unlikely to affect the local market

In addition to the main announcement, the Finance Ministry reminded in a footnote, that starting from this month, the accumulation of FX according to the fiscal rule will take place in accordance to the new FX structure of the sovereign fund, where shares of USD and EUR were reduced from 45% to 35% each, in order to make way to CNY (15%) and JPY (5%). This, however, does not mean, in our view, that the structure of the CBR's FX operations on the local market will change.

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Disclaimer: This publication has been prepared by the Economic and Financial Analysis Division of ING Bank N.V. (“ING”) solely for information purposes without regard to any ...

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