The Central Bank of Russia (BCR) has announced that it will suspend buying foreign currency in the domestic foreign exchange market from Thursday, a decision taken to limit the weakening of the ruble, to its lowest level against the euro and the dollar. since March 2022.
“Until the end of 2023”
“From August 10, 2023 and until the end of 2023, the Central Bank has decided to stop buying foreign currency in the domestic market (…) in order to reduce the volatility of financial markets,” the BCR announced in a statement. Wednesday night.
This announcement, expected by several market participants, marks the abandonment of its budgetary rule according to which Russia buys or sells currencies, stored in its National Wealth Fund, to balance its federal budget according to variations in income linked to hydrocarbons.
It comes as the ruble has tumbled in recent weeks, raising fears among many Russians that their standard of living will fall.
On Thursday morning, it took 107 rubles to 1 euro and 97 to the dollar, the lowest levels for the ruble since the first weeks after the start of the Russian offensive in Ukraine.
The BCR, which acts there on behalf of the Ministry of Finance, had, however, resumed its foreign exchange purchase and sale operations in the national exchange market in mid-January, after almost ten months of suspension marked by a hail of sanctions adopted. in response to the military intervention in Ukraine.
Reduce dependence on Washington
Until February 2022, Russia mainly used dollars and euros to balance its budget.
But Moscow is now in a race to de-dollarize its economy to be less dependent on Washington, its diplomatic rival, announcing in January that it wanted to trade mainly the yuan, the currency of its Chinese partner.
A possible decision on the “resumption” of the operations of the BCR “will be taken taking into account the real situation of the financial markets,” the organization that guarantees the country’s financial stability said in its press release on Thursday.
Source: BFM TV
