Russia’s Finance Ministry is set to significantly increase its foreign currency purchases in October, a move that could impact the ruble’s value. The ministry plans to buy 279.4 billion rubles’ worth of foreign currency from October 7 to November 6, marking a substantial rise from previous purchase levels. Analysts suggest that while this could put downward pressure on the ruble, the effects might be mitigated by other economic factors.
The increase in foreign currency purchases follows a period of rising oil prices, which averaged $92.10 per barrel in September, up from $67.10 in the previous month. This surge in oil prices is expected to boost government revenue from energy taxes, with oil and gas income projected to surpass the fiscal rule’s baseline by nearly 290 billion rubles. This influx of revenue could help counterbalance the ruble’s potential depreciation.
Experts believe that despite the planned increase in government purchases, the ruble might not experience a sharp decline. This is because higher oil prices could lead to increased foreign currency earnings for Russian energy exporters. These companies are likely to sell more of their foreign earnings to meet tax obligations, which could provide some support for the ruble.
However, analysts caution that the timing of government currency purchases, export revenues, and tax payments could lead to fluctuations in the exchange rate. While some forecasts suggest the ruble could weaken against the US dollar, many analysts remain optimistic that the currency will hold steady due to the substantial foreign currency reserves held by exporters.
The ruble’s short-term performance will largely depend on the interplay between government demand for foreign currency and the supply generated by oil exports and corporate tax payments. The situation remains dynamic, and market participants will be closely watching these factors over the coming weeks.