Russia's finance ministry said it will increase its daily purchases of foreign currency for state reserves to the equivalent of 15.1 billion rubles ($265.10 million) between January 15 and February 6.
Total purchases for the upcoming period will be equivalent to 257.1 billion rubles, the ministry added.
The ministry said it was increasing its purchases of dollars and other currencies because of higher prices for oil, Russia's main export, which currently hover just below three-year highs.
In the preceding period, from December 7 to December 28, the finance ministry bought 12.7 billion rubles of forex a day, Reuters recalls, adding that analysts predicted the ministry would buy a total of 242 billion rubles between Jan. 15 and Feb. 6.
The country's Finance Minister Anton Siluanov said last month the ministry planned to prop up state reserves in 2018 with the equivalent of around 2 trillion rubles this year if prices for Russia's Urals oil blend hover at $54-55 per barrel.
The head of the department of stock markets and financial engineering of the Faculty of Finance and the Banking Business of RANEPA, Konstantin Korischenko, speaking with Vestnik Kavkaza, said that purchases of $4.5 million on the domestic market will not have a strong impact on the ruble's exchange rate. "The Ministry of Finance and the Central Bank have been buying currency for a long time, these purchases were slightly smaller, but also significant - $2 billion and $3 billion per month. Experience has shown that these purchases did not affect the ruble exchange rate, so I think this amount will not have a strong impact on the ruble," he said.
Further, the purchased currency will be sent to the Central Bank's assets within its reserves. "We need to consider this situation from the standpoint of the size of the budget. Yes, the reserve fund will be increased, but the money spent for the purchase of the reserve funds will be withdrawn from the current budget. If additional oil and gas revenues were not converted to state reserves, it would be possible to increase budget expenditures at their expense, including spending on investments in the economy or on federal payments," Konstantin Korishchenko noted.
Professor of the RANEPA faculty of Finance, Money Circulation and Credit, Yuri Yudenkov, in turn, expects that still the ruble will come under pressure. "I think that the ruble will slightly decline after these purchases, and the dollar will increase. Such a policy of the Ministry of Finance is groundless, it does not correspond to the strategic course of gaining more independence by the country and proclaimed independent conduct of monetary and credit policy. Much concern is that the Ministry of Finance does not see any better investment of cash, except for the purchase of currency," he noted.
"The ministry does not invest additional revenues in the development of industry and the country as a whole, does not take any cardinal steps to improve the economy, there are no strategic projects where these oil and gas money could be invested. The chief administrator of budgetary funds simply directs them to purchase foreign securities. The country will have no real benefits from this. It is clear that the Ministry of Finance is giving a signal to all currency speculators about the growth of the dollar exchange rate, so that they also started playing on the depreciation of the ruble, and, most likely, it will happen," Yuri Yudenkov predicts.
