Ruble weakened due to lower FX sales by exporters, higher demand from some traders - Central Bank
MOSCOW. Jan 19 (Interfax) - The ruble started to weaken in the second half of December as foreign currency sales by the biggest exporters declined and due to increased demand for FX from some traders, the Central Bank of Russia said in a Financial Market Risks report.
"A weakening of the ruble was seen in the currency market at the end of the year under the influence of temporary factors," the regulator said.
Net FX sales by the biggest exporters decreased to $15 billion in December from $15.6 billion in November, $17.9 billion in October, $21.1 billion in September, $21 billion in August, $16.8 billion in July, $20.3 billion in June, $19.4 billion each in May and April, $17.1 billion in March, $25.2 billion in February, and $20.1 billion in January.
Average intra-daily net sales by the biggest exporters decreased to 37.7 billion rubles or $576 million in the second half of December, down 24% from the first half of December, and is partly seasonal in nature, the Central Bank said.
"Reduced FX supply on the part of the biggest export companies occurred against the backdrop of a downward price trend for exported hydrocarbons with a simultaneous reduction in the physical volumes of oil and gas exports," the regulator said
It said systemically important banks, as the main agents for the sale of FX earnings by exporters, remained the biggest sellers of foreign currency on the market. In December, these players sold FX for 725 billion rubles, as much as in November when they sold 727 billion rubles but less than in October, when they sold 837 billion rubles.
The Central Bank also said there had been an increase in demand for "toxic" currency from individual participants in the second half of December. In addition to traditional buyers - importers and individuals- demand for "toxic" currency was seen from clients who were buying businesses from companies from unfriendly countries forced to leave the Russian market due to sanctions. Also, the process of converting FX deposits into ruble deposits accelerated at the end of the year, leading to increased demand for FX from banks to offset the impact on their open foreign exchange position.
Non-systemically important banks remained the main buyers of FX on the exchange, purchasing FX for 567 billion rubles in December and 506 billion rubles in November. At the same time, most purchases - 68% - in December occurred in the second half of the month at 386 billion rubles.
Private individuals usually have a counter-cyclical impact on the currency market: they sell "toxic" currency when the ruble weakens and buy dollars and euros when the ruble strengthens, the Central Bank said. However, there were no systematic sales on their part in December. The exception was December 15, when individuals sold "toxic" currency through the largest banks for 25.8 billion rubles, which temporarily slowed the weakening of the ruble.
In general, individuals bought foreign currency for 154.2 billion rubles on the exchange and through the largest banks in December, against 70.1 billion rubles in November. This also had a negative impact on the ruble's exchange rate, the Central Bank said.
The ruble weakened in the second half of December 2022, falling against the dollar and the euro by 10.94% and 10.66%, respectively, and against the yuan by 9.97% from December 15 to December 21.
At the same time, currency market trading volume increased considerably, reaching 8.9 trillion rubles in December, the most since February 2022. Most of the growth was for the CNY/RUB and USD/CNY pairs, with USD/CNY turnover doubling compared with October to 950 billion rubles or 11% of overall turnover in December. USD/RUB trading fell to 40% of turnover, its lowest of 2022.