Treasury to halve yuan sales under fiscal rule

In July, the Ministry of Finance plans to sell foreign currency under the budget rule for an amount equivalent to 34.9 billion rubles, the daily volume of transactions will amount to 1.7 billion rubles. This is stated in a press release from the ministry. In June, daily sales amounted to 3.6 billion rubles. Thus, from July 7 to August 4, the ministry will reduce the sale of foreign currency by 2.1 times.

The Ministry of Finance has resumed transactions with foreign currency under the budget rule since January this year. The volume of transactions is determined depending on the amount of oil and gas revenues of the federal budget. If revenues exceed the base level for the month, then the Ministry of Finance buys yuan, otherwise it sells it. Interventions can be carried out in Chinese currency or in gold, the Central Bank acts as an agent for the execution of transactions.

The agency expects a shortfall in oil and gas revenues (OGD) for July by 4.5 billion rubles. The deviation of actual income from the expected monthly volume for June 2023 amounted to -30.3 billion rubles, the report says. In June, the federal budget received 528.6 billion rubles. oil and gas revenues, which is 26% less than a year earlier, follows from the data of the Ministry of Finance. In the first half of the year, the volume of oil and gas revenues reached 3.4 trillion rubles, which is 47% less than in the same period last year. At the end of the year, the Ministry of Finance predicts 8 trillion rubles. basic oil and gas revenues.

According to the Moscow Exchange, on July 5, 16:00 Moscow time, the dollar exchange rate was 90.93 rubles, the euro – 99.10 rubles, the yuan – 12.5 rubles. Since mid-June, the ruble began to weaken sharply, the trend intensified in early July. On July 4, the dollar for the first time since March 2022 exceeded 90 rubles.

The effect of the fiscal rule on the foreign exchange market is small, says a stock market expert “BCS World of Investments” Dmitry Babin. However, taking into account that there is not enough foreign currency on the market and the demand for it is increased, in the short term, a decrease in sales may even act as an additional driver for the weakening of the ruble.

At the same time, the decrease in foreign currency sales within the framework of the budget rule means that the situation with the size of oil and gas revenues is improving, Babin added. “If this trend develops, in the longer term it can provide tangible support to the ruble,” he said.

The decline in sales is obvious, since the depreciation of the exchange rate gives the budget additional income, said Natalia Orlova, chief economist at Alfa-Bank. If the ruble weakens a little more and the supply volumes do not change, then this will seem to be an equilibrium rate for the budget, providing the Ministry of Finance with the collection of planned oil and gas revenues, the expert emphasized. According to Orlova, the weakening of the ruble is also facilitated by the seasonal factor – summer vacations. The expert also suggested that there is a risk of deviation by year from the base level of NGV – it may be equivalent to the deviation already achieved.

In the current conditions – with low oil and gas prices, limited export volumes – it is unlikely to reach the level of 8 trillion rubles. according to the results of 2023 (this is the so-called basic amount of revenues – an indicator that determines the amount of budget expenditures. – Vedomosti), the chief economist believes “BCS The world of investments” Natalia Lavrova.

The average price of Urals oil in January-June 2023 was $52.17 per barrel. In June, the cost of Urals was $55.28 per barrel, which is 1.58 times lower than in June 2022 ($87.25 per barrel).

“Our forecast includes some recovery in energy prices, so we expect some improvement in terms of oil and gas revenues in the second half of the year, but in any case, it will not be possible to reach the budgeted levels,” Lavrova added.