The Ministry of Finance will increase the purchase of foreign currency and gold under the fiscal rule in October

The Ministry of Finance plans to allocate 398.72 billion rubles for the purchase of foreign currency and gold. for the period from October 6 to November 7, follows from the ministry’s message. The daily volume of purchases will amount to 18.12 billion rubles, which is 38% more than in September and almost 10 times higher than the amount of transactions in August.

The ministry moved to purchase foreign currency in August amid an increase in oil and gas revenues a month earlier – they exceeded the established base level by RUB 157.9 billion. From August 7 to September 6, the Ministry of Finance allocated 40.5 billion rubles for these purposes, and the daily volume of purchases amounted to 1.8 billion rubles. From September 7 to October 5, the ministry increased the purchase amount to 276.16 billion rubles. or up to 13.15 billion rubles. daily.

In October, the expected volume of additional oil and gas revenues (OGR) of the federal budget is projected in the amount of 513.48 billion rubles, the ministry said in a statement. In September, the budget received oil and gas revenues in the amount of 740 billion rubles, of which 69 billion rubles. – additional (that is, above the established basic level). At the same time, the actual income received in September was 114.8 billion rubles. less than expected level.

The Ministry of Finance resumed operations under the updated fiscal rule on January 13. According to it, annual basic oil and gas budget revenues are set at 8 trillion rubles, and revenues in excess of this amount should be sent to the National Welfare Fund. The volume of currency transactions depends on the amount of oil and gas revenues of the federal budget. If expected revenues exceed the basic monthly level, the Ministry of Finance purchases yuan, and if there is a shortfall in oil and gas revenues, it sells the corresponding amount of currency. All transactions take place on the Moscow Exchange in the Chinese yuan-ruble instrument.

Since the beginning of the year, oil and gas revenues have exceeded the base level in March – by 12.7 billion rubles. and in July – by 157.9 billion rubles. In the remaining months, the Ministry of Finance recorded a shortfall in oil and gas revenues compared to the plan.

After the Ministry of Finance switched to purchasing foreign currency, experts expressed concerns about the impact of these operations on the ruble, which began to fall rapidly in June of this year and reached the psychological mark of 100 rubles/$ in August.. In September, the national currency was trading in the range of 94 – 97 rubles ./$. The ruble exchange rate briefly strengthened after the Central Bank accelerated the sale of foreign currency almost tenfold in order to repay the foreign currency issue of Eurobonds. From September 14 to 22, the regulator sold foreign currency worth 150 billion rubles. to provide holders of foreign currency bonds with payments in rubles. On September 21, the US dollar exchange rate dropped to 95.91 rubles/$. On October 2, the rate was again close to the 100 ruble mark. (99.76 rubles), on October 4, the value of the dollar is estimated at 99.49 rubles/$.

In order to reduce exchange rate volatility, the Central Bank announced the suspension from August 10 until the end of the year of the purchase of foreign currency on the domestic market as part of mirroring the operations of the Ministry of Finance. This decision neutralizes any impact of increased foreign currency purchases on the ruble, says Gazprombank economist Pavel Biryukov. According to his assessment, the national currency will continue to be supported by currency sales by the Central Bank and exporters within the framework of new flexible duties.

At the current exchange rate and oil prices, oil and gas revenues will be at the level of 1.1-1.2 trillion rubles. monthly, which is 2 times higher than the level of the first half of the year and higher than budget forecasts for 2024, says the head of the Bank’s Corporate Business Analytics DOM.RF Victor Tunev.

On the one hand, high oil and gas budget revenues will immediately increase foreign currency sales by exporters and may contribute to the strengthening of the ruble until the end of the year, he believes. On the other hand, market participants see the “overhang” that is formed by currency purchases postponed until next year according to the budget rule. According to the expert, the ruble will remain in the range of 90-100 rubles/$ in the coming months.

The budget rule does not target a certain level of the ruble exchange rate, so the currency purchase operations that the Bank of Russia was supposed to carry out in 2023, but suspended, may well not be compensated – this will not contradict the logic of the budget rule, says Alexander Isakov, chief economist for Russia at Bloomberg Economics . If such a decision is made, the ruble may strengthen within 2-3% due to the withdrawal of the “overhang” of currency purchases, the expert suggests.