Russian central bank pauses US dollar acquisitions
Date
12/2/2024 12:38:28 AM
(MENAFN) The bank of Russia announced on Wednesday that it will halt foreign currency purchases on the domestic market from November 28 until the end of the year, aiming to curb market volatility. This move comes as the ruble fell to near-record lows, reaching 114 rubles to the US dollar.
In addition to suspending dollar purchases, the central bank confirmed it will continue selling foreign currency to replenish the National Wealth Fund, conducting operations worth 8.4 billion rubles ($74 million) daily. The bank stated that any decision on resuming foreign currency purchases would depend on market conditions, and that these purchases would be deferred to 2025.
This measure echoes a similar step taken by the Bank of Russia last year, when it suspended dollar buying between August and December following Western sanctions, to prevent further depreciation of the ruble.
The ruble’s recent decline has been exacerbated by Western sanctions, including new restrictions imposed last week on Russia’s third-largest bank, Gazprombank, which handles energy export payments. Analysts warn that ongoing sanctions could further hinder foreign trade and reduce foreign exchange liquidity, prolonging the ruble's weakness into 2025.
While the ruble's depreciation poses challenges, experts note that it could benefit the Russian government by increasing the domestic value of revenue from energy exports, which are priced in dollars and euros. Finance Minister Anton Siluanov highlighted that the weak ruble is also advantageous for exporters, helping to offset the impact of the central bank's high interest rates.
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