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Russian cenbank plans to resume FX buying for reserves…

MOSCOW, July 24 – The Russian central bank plans to resume its purchases of foreign currency for state reserves that are pegged to oil prices in 2022, after pausing them this year amid the rouble crash, Governor Elvira Nabiullina said on Friday.

The central bank stopped putting pressure on the rouble with FX buying on the domestic market and started selling instead earlier this year for the first time since 2015 as the rouble nosedived over an oil price slump and the novel coronavirus.

Nabiullina said the central bank planned to restart buying FX under the fiscal rule when Russia’s Urals oil blend prices average $45 per barrel in 2022 <URL-E>.

The bank’s FX operations are closely watched by rouble traders as they steer Russia’s free-floating currency in the absence of other factors.

The central bank, which cut its rates to a record low on Friday, also decided not to carry out FX buying that it had to put on hold during the previous rouble crash in 2018.

Those postponed FX purchases will be netted with FX sales that the central bank planned to carry out as part of the deal to sell its stake in Russia’s No.1 lender Sberbank to the finance ministry, Nabiullina said.

Given that the postponed FX purchases are worth $19 billion, the central bank will sell only $2.6 billion in extra FX intervention in the fourth quarter, said Sofia Donets, chief economist at Renaissance Capital.

Without disclosing the amount that it will sell on the market after netting the internal flows, the central bank said this FX selling should not impact the Russian currency market. (Reporting by Elena Fabrichnaya and Andrey Ostroukh; Editing by Andrew Cawthorne)

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