The central bank needs to pay off Eurobonds maturing later this month
The Bank of Russia announced on Wednesday that it will increase the planned sale of foreign currency on the domestic market to 150 billion rubles ($1.5 billion), citing the need to repay government-issued Eurobonds.
According to a press release, the almost tenfold increase in the central bank’s daily “mirroring operations” is linked to investments from the government’s wealth fund. It now plans to sell $218 million worth of foreign currency per day from September 14 to 22.
Russia is due to make a $3 billion Eurobond payment on September 16, the regulator said, noting that most holders will receive payment in rubles, although some may then create additional demand for foreign currency.
“Under these conditions, the decision to redistribute foreign currency sales as part of mirroring transactions related to investing [from the National Wealth Fund] will help meet possible additional demand for foreign currency and reduce volatility in the foreign-exchange market during this period,” the statement reads.
The Russian ruble strengthened on the central bank’s announcement to 97.59 against the US dollar and 104.81 versus the euro.
Market players described the regulator’s move as positive for the ruble, claiming that a short-term increase in foreign currency sales could prevent the weakening of the Russian currency during the repayment of Eurobonds.
“It is still difficult to say with certainty where exactly the exchange course will move. But in fact, we just see the sale of the previously planned volume of foreign currency ahead of schedule. It would have been sold anyway, but over a longer period,” Vasily Karpunin, head of the Information and Analytical Content Department at BCS World of Investments, explained to RBK.
The Russian currency has been weakening against the dollar since early June, when it was trading at around 80-81 to the greenback.
For more stories on economy & finance visit RT’s business section