Influence of internal political factors on weakening of ruble was insignificant, exports influenced exchange rate - CBR
MOSCOW. July 10 (Interfax) - In June 2023, exporters reduced sales of foreign exchange earnings 22.9% from $9.1 billion in May to $7 billion (to the level of sales in April), and because of this, the ruble weakened 10.4% against the US dollar over the month against a 1% decline in May, according to a review of financial market risks published by the Bank of Russia.
"The change in the exchange rate of the ruble in June took place mainly because of a reduction in foreign exchange receipts from Russian exports," the Central Bank said.
"At the same time, internal political events at the end of the month (June 23-25) had an insignificant impact on its monthly dynamics," the Bank of Russia believes.
Meanwhile, these events led to an increase in volatility in the foreign exchange market. "Its main peak fell on the weekend, mainly affecting the situation on the over-the-counter market. A sharp increase in uncertainty contributed to a short-term surge in quotes for buying foreign currency in banks. Quotes for buying currency fluctuated in a wide range," the CBR said.
"A quick settlement of the situation contributed to prompt stabilization in the foreign exchange market," the Central Bank said.
On June 24, individuals made net purchases of foreign currency through the largest banks in the amount of 7.1 billion rubles, and then 6.2 billion rubles over the weekend of June 24 and 25, of which 75% was in non-cash foreign currency. Over the last week of the month (from June 24 to June 30), retail customers bought 4.1 billion rubles in foreign currency. In total, in June, retail purchases of foreign currency reached 0.3 billion rubles, while purchases of 9.2 billion went via the stock exchange, and sales of 9 billion through the largest banks.
The Central Bank notes that the demand for foreign currency steadily increased in June due to the increase in the concentration of large participants. "The share of the largest buyers grew from 10% to 40% since the beginning of the month. The share of the largest participants (top 2, top 3 and top 5) also doubled or more, which further influenced the movements of the ruble exchange rate," it says in the review.
Some corporate banking clients began to convert their foreign currency loans into rubles due to the falling ruble, the Central Bank said. Banks simultaneously began buying foreign currency in order to balance open foreign exchange positions. "Thus, the demand for foreign currency increased, which put additional pressure on the ruble," the Bank of Russia said.
Systemically important credit institutions remained the largest sellers of foreign currency on the spot market as the main agents for the sale of exporters' foreign exchange earnings. The volume of currency sold by them in June increased slightly to 377 billion rubles compared to 352 billion rubles in May.
The net buyers of foreign currency on the stock exchange were mainly banks that were not part of the systemically important group, which purchased foreign currency for importers and other clients for their international transfers. Their volumes of net purchases decreased in June to 400 billion rubles from 449 billion rubles in May.