Russian Central Bank to start 'mirroring' National Wealth Fund's investment operations on ruble-yuan market as of Aug 1

MOSCOW. July 21 (Interfax) - In addition to regular operations for buying/selling foreign currency under the budget rule, as of August 1, the Bank of Russia will begin conducting operations in connection with the use of funds from the National Wealth Fund to place them in permitted financial assets within the country, the CBR said in a statement.

The amount of foreign currency sold or purchased will be determined based on the results of each half-year in the amount of the net volume of NWF investments in rubles during this period (the volume of gross placement minus the gross return of funds previously placed in permitted financial assets). "Mirror" transactions will be conducted in the MOEX currency section in the "Chinese yuan - ruble" instrument with a settlement term "tomorrow" evenly over half a year with a shift of one month ahead.

From January 1 to June 30, the net value of operations to place funds from the NWF into permitted ruble-denominated financial assets totaled 288.4 billion rubles. Thus, from August 1, 2023 to January 31, 2024, the daily volume of transactions will equal 2.3 billion rubles, the Central Bank says.

At the same time, the CBR is setting a limit on the maximum total amount of these transactions for the first half of the year of 300 billion rubles. If the fund's actual investment exceeds this value, the excess will be carried forward for "mirroring" in subsequent periods.

The actual daily net volume of transactions in the foreign exchange market and their direction will be determined as the balance of two values: the volume of regular transactions under the budget rule and the volume determined from the amount of National Wealth Fund investments

To minimize the impact of these operations on the exchange rate, the CBR will buy or sell foreign currency on the market evenly throughout each trading day.

The volume of transactions from February 1 to July 31, 2024 will be determined and published in January of next year based on the results of the placement of NWF funds in the second half of the year.