Russia's Finance Ministry said it would increase its daily purchases of foreign currency for state reserves to the equivalent of 15.7 billion rubles ($277.39 million) between February 7 and March 6, a record high.
According to the ministry, in the preceding period, from Jan. 15 to Feb. 6, the ministry planned to buy 15.1 billion rubles of forex a day. Total purchases for the upcoming period will be equivalent to 298.1 billion rubles.
The ministry added it was increasing its purchases of dollars and other currencies because of higher prices for oil, Russia's main export, which in January rose to levels last seen in late 2014.
Chairman of the State Duma’s Financial Market Committee, Anatoly Aksakov, speaking with Vestnik Kavkaza, noted that the "budget rule", according to which, additional budgetary oil revenues are converted into foreign currency in reserves, strengthens the Russian economy. "Now we have a record surplus of additional budget revenues due to high oil prices. According to the law, this money is spent on replenishing reserves through currency purchases, which nicely affects the situation with the exchange rate: the ruble exchange rate does not strengthen, which helps maintain competitiveness of the Russian economy," he pointed out.
The advisor on macroeconomics to the CEO of the 'Opening-Broker' brokerage house, economist Sergey Hestanov, explained that such a practice of disposing additional oil budget revenues proves to be very effective. "We have an increase in international reserves, which is a good thing in the case of changing oil market conditions. The volume of purchases is increasing because the ruble rate does not decline, indicating that there are significant liquidity reserves on the market. If the rate decline significantly, then, most likely, the ministry's purchases will be cut, if this does not happen, we can expect that the volume of purchases will be kept or even be increased," the economist predicts.
