Will the Russian Ministry of Finance weaken the ruble by purchasing foreign currency?

In February, the Ministry of Finance will resume buying currency in accordance with the fiscal rule.

As a result, there will be a 50% decrease in foreign currency sales in the local market.

The ruble may suffer another setback if the Central Bank decreases its foreign currency sales.

According to Alfa Bank's forecast, the dollar could potentially reach a value of 100 rubles by the conclusion of 2024.

According to the department, the Ministry of Finance will resume buying currency in accordance with the fiscal rule in February, as there has been a rise in the estimated surplus of oil and gas revenues.

According to RBC, the total amount of foreign currency and gold purchases between February 7 and March 6 will be 73.2 billion rubles, equivalent to a daily average of 3.7 billion rubles.

Simultaneously, the Central Bank plans to sell an extra 11.8 billion rubles worth of foreign currency (yuan). As a result, the total daily amount of currency sales will be reduced to 8.1 billion rubles, which is half of what it was a month ago.

According to Alexander Isakov, an economist at Bloomberg Economics for Russia, the recent decrease in sales by the Ministry of Finance and shift towards purchases is not entirely negative news. This change will result in an increase in tax sales from exporters, compensating for the decrease in currency supply from the Ministry of Finance. In fact, Isakov predicts that the revenue from these increased sales of foreign currency by exporters will outweigh the loss from the Ministry of Finance.

However, he claims that there is a one-month lag between the price of oil and fluctuations in the amount of currency in circulation. The recent decline in the value of the ruble is a result of the relatively low oil prices in December.

Ari-Capital Management Company is certain that the Central Bank's decision to decrease foreign currency sales after February 6 will further harm the ruble. The imposition of stricter sanctions on Russian oil carriers is also a sign of the ruble's decline, resulting in a considerable gap between Russian Urals oil and Brent. The company predicts that the ruble will drop to 94 rubles per dollar in February.

Rosbank reports that although the Central Bank of the Russian Federation is experiencing a decrease in foreign currency sales, the Ministry of Finance's upcoming strategies are expected to have a neutral impact on the ruble.

Based on Alfa Bank's primary prediction, the value of the dollar may increase to 100 rubles by the conclusion of 2024.