Russian Finance Ministry to resume forex purchases on currency market soon
MOSCOW. April 2 (Interfax) - The Russian Finance Ministry plans to resume foreign currency purchases on the currency market soon, signaling an end to the period of heightened volatility.
"The Finance Ministry will soon, literally in the next few days, resume our participation on the currency market for forming the foreign currency Reserve Fund," Finance Minister Anton Siluanov said at an Association of Russian Banks meeting in Moscow.
The daily volume of purchases will be the same as previously planned, 3.5 billion rubles, Deputy Finance Minister Alexei Moiseev told journalists later. "Generally speaking, nothing is changing. We are currently working out the formalized mechanism under which we can halt the purchases in the even of market destabilization," Moiseev said.
The mechanism should be free of any subjective factors. "So that we aren't later accused of letting it rain down on someone, somewhere. So that the mechanism is spelled out and clear to everyone," he said, adding that the criteria under which forex purchases would be automatically suspended or restarted were still being drawn up, but would likely be tied to the value of the currency basket and Central Bank interventions.
Asked about the overall amount of forex to be purchased, Moiseev said: "Whatever is left, that is what we will buy. The government has approved our proposal [on postponing transfer of forex to the Reserve Fund] until October 1, so we have plenty of time.
Earlier, Siluanov said: "On the other hand, we will begin intensively using budget funds placed on deposits, in repo operations."
"We plan to lower the balances on account at the Federal Treasury in the Central Bank by 67% by the end of the year. On average it was 600 billion to 1 trillion rubles. The decision has now been made to reduce the balance to 300 billion rubles and to 200 billion rubles by year-end. We will inject this liquidity into the economy and the banking sector," Siluanov said.
The Finance Ministry began buying foreign currency on the market for the Reserve Fund on February 20, but suspended those operations on March 4 due to high exchange rate volatility and ruble weakening. The Finance Ministry and the Treasury had planned to buy the equivalent of 3.5 billion rubles a day in the period from February 20 to the end of May, or a total of 212.2 billion rubles. A total of 38 billion rubles had been spent at the time the purchasing was halted.