Russia kicks off 2023 forex intervention

Russian nominal GDP is likely to be $2.14 trillion this year, the highest since 2013

MOSCOW:

Russia said it would resume foreign currency interventions with the sale of yuan from Friday, underscoring the growing importance of China’s currency in Moscow’s efforts to ensure economic stability amid Western sanctions.

After the West imposed the most severe sanctions in modern history over the war in Ukraine, Russia’s economy has shown remarkable resilience but the world’s biggest producer of natural resources is now turning increasingly towards China.

Russia’s finance ministry, which along with the central bank led Moscow’s economic response to the sanctions, said it would sell 54.5 billion roubles ($798 million) in foreign currency from January 13 amid lower oil and gas revenues.

“In order to increase the stability and predictability of domestic economic conditions, as well as to reduce the impact of volatile energy market conditions on the Russian economy and public finances, the Finance Ministry will resume operations for the purchase/sale of liquid assets,” the ministry said.

Russia’s 2023 budget is based on a Urals blend price of around $70.1 a barrel, though Russia’s main blend is currently trading at below $50 a barrel. Russian nominal GDP is likely to be $2.14 trillion this year, the highest level since 2013, according to the International Monetary Fund.

Published in The Express Tribune, January 12^th, 2023.

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