MinFin currency purchases won't have strong influence on exchange rate - Ulyukayev
ST. PETERSBURG. June 20 (Interfax) - The Russian Finance Ministry's currency purchases on the market will not have a strong influence on the exchange rate, Central Bank First Deputy Chairman Alexei Ulyukayev told reporters on the sidelines of the St Petersburg Economic Forum.
"I don't think they'll have a strong influence," Ulyukayev said.
"It's not a material factor at all," he said, adding that there's still time for everything to be worked out before August, when the system is launched in test mode.
In theory the Finance Ministry's currency purchases could have an impact on the ruble, but in the current macroeconomic situation this will not happen because of the small volume of these operations, he said. If foreign currency is purchased not once a year as it was before but with a constant presence on the market then this could increase demand for foreign currency and somewhat reduce the price of the ruble against the bi-currency basket, or against the dollar, euro and other currencies.
"But that is in theory. We need to understand that the volume of this buying will go down. This depends on the fiscal situation, on the size of the budget surplus. We see that now and in the foreseeable future it will not be significant in a macroeconomic sense so we should not expect it [Finance Ministry foreign currency buying to impact the ruble]," he said.
These operations could weaken the ruble if the mechanism was introduced when the Central Bank of Russia was acquiring a large amount of foreign currency for its own reserves and to replenish the Reserve Fund and the National Wealth Fund.
The Central Bank will probably balance the result within its buying for the Finance Ministry and its intervention, he said. "We will have certain volumes that we will have to buy for the Finance Ministry on a daily basis and if it turns out that we have to sell we will probably balance the result," he said.
Finance Minister Anton Siluanov has said the currency purchases on the market to top the Reserve Fund up would begin as early as August 2013. Deputy Finance Minister Alexei Moiseyev prior to that noted that the process by which the Finance Ministry buys currency on the market and the process by which this is placed at deposit auctions would be inter-related.
Central Bank Chairman Sergei Ignatyev said on June 19 that the purchase procedure envisions the Finance Ministry buying currency on the market if the Reserve Fund needs replenishing, Ignatyev said. "A [procedure] has been prepared, in accordance with which the Finance Ministry in the sphere of replenishing the Reserve Fund, if conditions for its replenishment arise, will be regularly buying currency from the CBR, one might say, on a daily basis. And conversely, if the Reserve Fund has to be spent, for example, in the case of a budget deficit, then the Finance Ministry will be selling currency to the CBR and the CBR will be selling those amounts on the market," he said.
Deputy Finance Minister Moiseyev said previously that that the Finance Ministry plans a uniform entry onto the market with currency purchases for the Reserve Fund in accordance with forecasts for the transfer of oil and gas revenues to the Fund in 2013.