The Ministry of Finance of the Russian Federation will hit the ruble, reducing the sale of foreign currency by half
In July, the Russian Federation's Ministry of Finance will reduce the sale of yuan by more than 50%.
On Wednesday, the dollar exchange rate surpassed 91 rubles/$ for the first time since the end of March in 2020.
The ruble is expected to continue its downward trend according to Alfa-Bank.
Rosbank has revised its forecast for the ruble, predicting that it will end the quarter at 87 per dollar, down from its previous forecast of 75.
The Finance Ministry announced on Wednesday that the total volume of foreign currency (yuan) sales under the budget rule from July 7 to August 4 will be 34.9 billion rubles, with 1.7 billion rubles sold daily.
In June, the department sold foreign currency for a total of 74.6 billion rubles, with daily sales amounting to 3.6 billion rubles. This is a decrease of 53% compared to the previous month, more than double the amount.
In July 2023, the Ministry of Finance is expecting to receive less than 4.5 billion rubles in oil and gas revenues, which is why they are selling yuan to replenish the federal budget. This is a decrease of 50% year-over-year from January-May, when the oil and gas revenues totaled 2.853 trillion rubles.
The Ministry of Finance attributed the decline in oil and gas revenues to the high figure from the previous year, a decrease in the price of Urals oil, and a reduction in natural gas exports, according to Kommersant. The average price of Urals oil in June 2023 was $55.28 per barrel, which is 1.6 times lower than the June 2022 figure of $87.25 per barrel.
It was reported on the eve of Vedomosti that the Russian Federation's Ministry of Finance proposed to reduce budget expenditures for 2024 by 10% in order to address the increasing disparity between expenditures and incomes.
Alfa-Bank believes that further weakening of the ruble is the most probable outcome, given yesterday's statement from the Central Bank that they do not intend to address the ruble's depreciation by requiring exporters to sell foreign currency.
Rosbank has increased its forecast for the dollar at the end of the third quarter from 75 to 87 rubles. The lack of requirements for the repatriation of export earnings diminishes the importance of fundamental indicators (such as the trade balance), making capital outflow by companies and individuals the main factor, according to the bank.
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