Non-residents buy 415 bln rubles in FX in week of Feb 21-28 - CBR

MOSCOW. April 14 (Interfax) - Foreign participants bought 415 billion rubles in FX in the week from February 21 to 28, which is 62.21% of the total volume of purchases in February (667 billion rubles), according to a review of financial markets risks published by the Central Bank of Russia (CBR).

"At the end of February on the currency market, as well as in other periods of increased volatility, there was high demand for foreign currency on the part of foreign participants to close ruble positions", the CBR said.

Amid sanctions, the Central Bank took measures in terms of currency restrictions and currency control, which contributed to a significant reduction in demand for foreign currency, primarily on the part of non-residents, as well as resident legal entities and individuals, the regulator said. "This made it possible to prevent the risks of a steady weakening of the ruble in the short term and to form conditions for maintaining a balanced exchange rate," the Central Bank said.

In March, exporters sold foreign currency totaling 865 billion rubles, acting in accordance with the Russian president's decree on mandatory sale of foreign currency earnings. The demand for foreign currency in March mainly came from systemically important lenders, which needed it to cover their currency liabilities. The Central Bank notes that in March non-financial institutions (exporters) began selling their currency proceeds through authorized banks, rather than directly.

The public from February 1 to 22, 2022, mostly bought hard currency on the exchange and over-the-counter markets - 51 billion and 60 billion rubles, respectively. Starting on February 23, there was a change in the trend: in the period from February 23 through March 31, individuals carried out a net sale of foreign currency, the regulator said. Altogether during this period, individuals sold 390 billion rubles of currency through Russian banks as well as 180 billion rubles on the exchange market.

The CBR points to a significant change in the currency swap market, where foreign participants traditionally adhered to the strategy of opening a short position on FX and a long position on the ruble. In February their aggregate short currency position decreased from $11bn to $2bn. "On the whole, amid changes in trends, open positions on the market of currency swaps decreased substantially. Due to the narrowing of the supply of FX liquidity in the market there was a surge in the cost of foreign currency funding (up to 200% per annum), which subsequently stabilized at an increased level," the regulator said in its review.