Russia: We will start buying foreign currencies if the price of oil ranges between 88 and 90 dollars per barrel

The head of the Russian Central Bank, Elvira Nabiullina, revealed in an interview with Russian media that the bank is poised to initiate the purchase of foreign currencies if oil prices reach the range of $88 to $90 per barrel. She further indicated that the bank will persist in selling foreign currencies throughout January, with the specific volume of sales to be disclosed shortly.

In a strategic move, the bank had halted the acquisition of foreign currencies in August until the year-end to alleviate pressure on the ruble, which had depreciated to over 100 against the US dollar in August and September. Subsequently, the ruble has demonstrated a recovery, trading at approximately 92 rubles to the dollar as of Monday.

Nabiullina emphasized the bank’s role as either a net buyer or net seller of foreign currencies, a stance contingent on the prevailing oil prices. Brent crude futures settled at $79.07 per barrel on Friday.

In October, Russian President Vladimir Putin implemented mandatory sales of foreign exchange revenues for select exporting companies, aiming to stabilize the ruble. This intervention was prompted by the ruble reaching its lowest level against the dollar in over 18 months, attributed to capital outflows and constrained foreign currency reserves. The obligation for mandatory sales extends until March 2024.

Nabiullina clarified that this measure is temporary, expressing the bank’s anticipation of minimal disruption in the foreign exchange market when it concludes. Furthermore, she outlined a timeline of two to three months for the central bank to observe a steady decline in inflation before contemplating any decision to reduce interest rates.