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Russia cuts currency sales as energy exports stabilize

6 March 2023

Russia will reduce the amount of currency it plans to sell by early April as energy export earnings show signs of stabilizing despite international sanctions imposed on Moscow over its invasion of Ukraine, Bloomberg reports.

Russia’s Finance Ministry announced on Friday that it will sell 119.8 billion rubles ($1.6 billion) between March 7 and April 6 as part of a budget mechanism designed to protect the economy from oil price fluctuations. This is a reduction of over 40% in the amount of currency sold in March, compared to the previous month, according to Agerpres.

With most of its international reserves frozen by US and European sanctions, the Chinese yuan is the main asset that Russia can still use to sell foreign currency from its sovereign fund and cover budget spending.

“Foreign sales will decrease until May, and in July foreign currency purchases will begin,” estimated Alexander Isakov, economist for Russia at Bloomberg.

According to analysts, it is possible that foreign currency sales will drop to $500 million in April, after which the Ministry of Finance in Moscow will change direction and start buying foreign currency.

Bloomberg Economics estimates that in the second half of this year, the Russian Ministry of Finance may begin accumulating Chinese yuan at a rate of $500 million to $700 million per month.


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