Russia To Sell $18.9 Million Of Foreign Currency Till August
According to the latest from the Russian finance minister, the country's planning to sell $18.9 million or around 1.7 billion roubles worth of FX between 7th July - 4th August. When compared with last's month's data, that's a significant decrease.
It all started in January when Russia started the FX market interventions after inaction for several months. The shift started when Russia started to sell Yuan (CNY) instead of other currencies from the West, such as the Euro & USD. In fact, Russia even classified these currencies as unfriendly since the Western countries imposed sanctions on them.
Russia's shift away from the US Dollar & towards the CNY also highlights the growing power of the Chinese currency. If we look around, the trade in the CNY has been growing tremendously. Just a month ago, Pakistan also imported oil from Russia and made the payment in the CNY, which tells us that Russia is really serious about the shift.
For the next few months, the FX sales by Russia would amount to 34.9 billion roubles. On the other hand, experts believe that Russia's FX sales will be somewhere around 57 billion roubles.
If we look at the previous period (6th June - 7th July), the ministry was planning to sell FX reserves worth 74.6 roubles. The amount was to be used to compensate for the lower revenue from oil & gas sales.
The Russian government uses FX market interventions to build up reserves or to cover shortfalls. Recently, these interventions have increased in value & frequency after the Western sanctions on Russian exports.
For the month of June, Russia's revenue will be around 30.3 billion roubles which is below expectations. It would lead to a shortfall of 4.5 billion roubles which means more FX interventions.
In fact, the decreased revenue has also pushed the budget deficit of Russia to 3.41 trillion roubles in the period between Jan - May. Although we are only halfway through 2023, the budget deficit of Russia is already way higher than the 2023 year-end targets!