In a recent announcement, Russia’s finance ministry has revealed its decision to reduce the volume of daily foreign exchange (forex) sales in the upcoming month. This strategic move aims to manage the country’s economic stability amidst Western sanctions and lower oil and gas revenues.
Date: July 05, 2023
Place: New Delhi, India
Between July 7 and August 4, the finance ministry plans to sell foreign currency worth 1.7 billion roubles ($18.9 million) each day. This amount marks a decrease from the previous month’s daily operations. It is worth noting that Russia resumed forex interventions earlier this year, primarily selling yuan instead of Western currencies it considers “unfriendly,” highlighting the increasing significance of China’s currency in Moscow’s efforts to ensure stability.
The finance ministry expects its total forex sales on the market to reach 34.9 billion roubles in the coming month. However, financial analysts surveyed by Reuters had predicted a higher total of 57 billion roubles.
In the preceding period, from June 6 to July 7, the ministry had initially planned to sell 74.6 billion roubles’ worth of foreign currency to offset the decline in oil and gas revenues.
Forex interventions are carried out by the Russian government to cover deficits or accumulate reserves in response to fluctuations in earnings from the country’s crucial oil and gas exports, which have been impacted by Western sanctions. In June, the finance ministry reported oil and gas revenues that fell 30.3 billion roubles below expectations. Additionally, it anticipates a shortfall of 4.5 billion roubles from federal energy revenues in July.
The combination of reduced revenues and increased spending has led to a budget deficit of 3.41 trillion roubles from January to May, exceeding the target for the entire year by 17%. This fiscal pressure arises as Moscow continues its military offensive in Ukraine.
Disclaimer: This news is originally covered by Reuters. The currency-related information has been simplified by CurrencyVeda for educational purposes.