Russia likely to resume buying foreign currency for reserves after a year-long hiatus - Bloomberg

Russia's finance ministry is about to resume buying foreign currency, namely yuan, for its reserves, with an announcement due later this week, Bloomberg reports, citing sources.

First purchases are possible already in May, with Bloomberg estimating that initial volumes could amount to the equivalent of around USD 200 million in yuan per month.

Still, that would be a symbolic step showing that Russia has managed to stabilise its oil revenues despite Western sanctions.

“It will be important for the market that the state is starting to accumulate reserves again instead of spending them,” Natalia Milchakova, an analyst at Freedom Holding Corp., was quoted as saying.

“This may even positively affect the rouble.”

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Russia stopped purchasing foreign currency in late January 2022, a month before its full-scale invasion of Ukraine. 

This year, Russia’s finance ministry has only sold foreign currency under a revamped budgetary mechanism designed to insulate the economy from the volatility of commodity markets, Bloomberg notes.

Russia receives around a third of its budget revenues from the oil and gas industry.

Last months, the United States acknowledged for the first time that Russia can circumvent the oil price cap set by the Group of Seven (G7) countries.