The Central Bank of the Russian Federation has announced a temporary pause on purchases of foreign currency in the domestic market, effective from August 10 and continuing through the end of 2023, in alignment with the budget rule. This decision is described in an official message issued by the regulator. The aim behind the pause is to reduce volatility within financial markets and to safeguard the stability of the ruble during periods of fluctuating oil and gas revenues and shifting global liquidity conditions. The Bank clarified that a restart of foreign exchange purchases will be considered when financial market conditions warrant it, and will be executed within the framework of the budget rule. It noted that any purchases postponed during the relaunch of the mechanism could be spread out and occur in 2024 or later, depending on the evolving macrofinancial environment. — Bank of the Russian Federation.
In a separate announcement on August 3, the Ministry of Finance of the Russian Federation indicated the resumption of foreign exchange purchases under the fiscal rule for the first time since 2022. This signaling underscores the coordinated approach between monetary and fiscal authorities as they respond to revenue developments and market dynamics. The rebalance aims to align currency operations with actual budget performance, ensuring that foreign exchange interventions support macroeconomic stability. — of Finance of the Russian Federation.
Earlier, as part of the mechanics of the domestic foreign exchange market, operations suspended last spring under the fiscal rule were resumed in January 2023. During the early phase of the relaunch, the Central Bank started selling Chinese yuan specifically to support the Ministry of Finance’s financing needs. The decision to sell yuan was tied to the reality that oil and gas revenues evaluated against the base budget figures were below expectations. Consequently, yuan sales were limited to the January–July period. Over seven months, yuan sales totaled 559 billion rubles, based on Ministry of Finance data. If actual revenues exceeded the base forecast, the regulator would switch the stance and begin purchasing foreign currency again. — of Finance and Central Bank of the Russian Federation.
On July 21, the Central Bank of the Russian Federation announced a new framework for foreign currency management, indicating that purchases and sales of yuan in the market would be conducted against domestic ruble investments from the National Wealth Fund for the first half of the calendar year. The National Wealth Fund contributed 288 billion rubles to yuan-related operations in the first half of the year, and the daily volume of yuan sales during the six months leading up to August 1 was established at approximately 2.3 billion rubles. This adjustment reflects a broader strategy to manage currency exposures while leveraging fiscal reserves in a controlled, market-oriented manner. — Bank of the Russian Federation and National Wealth Fund.
Observing the overall market reaction, officials have suggested that the continued use of yuan in foreign exchange operations may be used strategically to support the ruble in periods of heightened external risk or volatility. The central bank emphasizes that any such measures will be calibrated to balance the needs of the budget with the ongoing objective of maintaining financial stability. In practice, this means monitoring oil and gas revenues, assessing base versus actual revenue trajectories, and adjusting intervention levels to minimize abrupt shifts in market prices. The broader implication is a carefully managed, rule-based approach to currency intervention that seeks to maintain predictable policy signals for investors and market participants. — Bank of the Russian Federation.