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Peter Davis

An writer at FOMOdrive

  • Sep 04, 2023
  • 2 min read

Sberbank revealed that it could bring down the ruble

Sberbank discussed how transactions of foreign investors purchasing shares can have a detrimental effect on the ruble exchange rate.

Currency sales on the market may be reduced as a result of these transactions.

An impressive amount of $10 billion could be exceeded by the total volume of share repurchase transactions.

On Thursday, the dollar rose above 96.60 rubles/$, adding more than three rubles from its lows on August 17. SberCIB experts have noted that the Russian currency is under pressure due to the potential for increased capital outflow.

SberCIB reported on Thursday that transactions to repurchase shares of Russian companies from foreign investors could result in a decrease in foreign currency sales on the domestic market and a weakening of the ruble.

Last week, Interfax reported that Lukoil had requested the authorities to purchase up to 25% of its shares from non-resident shareholders at a minimum discount of 50%. This follows a similar transaction that was completed by the Russian retailer Magnit.

Alexander Novak, the Deputy Prime Minister, affirmed yesterday that Lukoil had requested authorization from the government to purchase shares from foreign investors. He also mentioned that other oil and gas companies had made similar requests.

SberCIB estimates that the total volume of transactions of this kind could be more than $10 billion, with LUKOIL alone making up $5 billion. This could create a negative atmosphere for the ruble, as it increases the anticipation of more capital leaving the country in the future.

Foreign currency will not be entering the Russian foreign exchange market, resulting in a decrease in the amount of foreign currency available for sale by companies.

The Bank of Russia has confirmed in its review of financial market risks for July that the low sales volumes of foreign exchange earnings by exporters are having a negative effect on the ruble exchange rate. In June, the volume of sales of foreign exchange earnings by exporters dropped from 7 billion to 6.9 billion rubles, a decrease of 1.6%.

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