The Russian Ministry of Finance has set a plan to expand the scale of purchases in foreign currency and gold, following the budget rule, from October 6 to November 7. The daily target is 18.12 billion rubles, a figure reported in official ministry communications. That decision marks a continuation of capital allocations aimed at stabilizing the financial system amid evolving budget dynamics. [Source: Ministry of Finance communications]
Looking at October 2023, the budget forecast anticipated that additional oil and gas revenues would total about 513.48 billion rubles for the federal budget during the month. In parallel, the end of September 2023 showed a shortfall relative to the predicted monthly oil and gas receipts, amounting to a deviation of -114.76 billion rubles. Taken together, these adjustments helped shape the total funds available for foreign currency and gold purchases, which reached 398.72 billion rubles. These numbers highlight the government’s ongoing need to manage fiscal flows against a backdrop of fluctuating energy revenues and currency market conditions. [Source: Ministry of Finance data]
The October to November period will see the daily purchase volume nearly 38 percent higher than the period from September 7 to October 5, and about ten times greater than the period from August 7 to September 6. In response to these shifts, the Bank of Russia has indicated that it will not mirror the Ministry of Finance’s market activity through the end of 2023 in an effort to dampen volatility. The central bank also signaled the possibility of forward purchases in 2024 and beyond, suggesting a policy framework designed to balance intervention with market stability. [Source: Central Bank communications]
On August 7, the Ministry of Finance resumed foreign currency purchases under the budget rule for the first time since 2022. This resumption represented a return to a mechanism that had been paused during the earlier phase of budget adjustment, restarting the process of allocating and using foreign currency reserves in support of the national budget. [Source: Ministry of Finance statements]
Within the scope of the fiscal rule mechanism, market operations in the domestic foreign exchange market resumed in January 2023 after a halt in the spring of the previous year. The Central Bank began selling Chinese yuan to benefit the Ministry of Finance, reflecting coordination between top monetary authorities and fiscal policy. When actual oil and gas revenues exceeded the baseline level, the regulator would step back from purchasing foreign currency. Conversely, when revenues were below the baseline, the central bank tended to accelerate foreign currency sales to manage liquidity and exchange rate pressures. In 2023, data show that about 559 billion rubles worth of yuan was sold across seven months, illustrating the scale of currency operations tied to energy revenue outcomes. [Source: Ministry of Finance and Central Bank records]
Looking back, analysts have debated how the Central Bank’s decisions on not consistently buying foreign currency would affect the ruble’s exchange rate, particularly in the context of fluctuating oil and gas incomes and ongoing fiscal rule adjustments. The interaction between fiscal policy and monetary policy remains a focal point for observers, with concerns about volatility versus stability guiding both policy communication and market expectations. [Source: Market analysis and official statements]