The Central Bank will resume operations in the foreign exchange market using the National Welfare Fund from 2024
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From January 2024, the Bank of Russia will resume operations on the domestic foreign exchange market related to the replenishment and use of funds from the National Welfare Fund (NWF). Operations will take place, including taking into account all operations carried out with funds from the National Welfare Fund in 2023, reported press service of the regulator.
The Bank of Russia will determine the daily volume of transactions on the domestic foreign exchange market taking into account the balance of several values. Including, based on regular transactions for the purchase or sale of foreign currency in the amount of additional or shortfall in oil and gas revenues within the framework of the budget rule. The difference in the volume of regular operations deferred from August 10 to December 31, 2023 and the volume of expenditures of the National Welfare Fund to finance the budget deficit outside the budget rule for 2023 will also be taken into account. The volume of net investment by the National Welfare Fund in permitted financial assets in rubles for the second half of 2023 and the first half of 2024 will also be taken into account.
The budget rule is a mechanism for transferring excess income from the oil and gas industry into savings through the purchase of foreign currency. In 2023, the preset cut-off price for Urals, above which the currency was purchased, was excluded from the mechanism. Now, within the framework of the budget rule, currency is purchased if actual revenues from the sale of oil and gas for the month exceed the base level calculated by the Ministry of Finance.
The regulator noted that the final calculation of the final daily net volume of transactions on the domestic foreign exchange market in January 2024 will be presented in a separate press release at the end of December 2023. It will be determined taking into account the Ministry of Finance’s data on the use of National Welfare Fund funds.
The Bank of Russia does not buy currency on the domestic market within the framework of the budget rule as a mirror of the Ministry of Finance’s operations on the sale of yuan from the National Welfare Fund since August 10. These measures will remain in effect until the end of the year to reduce volatility in financial markets. The regulator assumed that deferred purchases could be made during 2024 and subsequent years.”
Read more about the current currency situation in the Russian Federation in the Kommersant article. “Half the market for the yuan”.
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