MOSCOW – Russia may start buying the currencies of “friendly” countries and use those holdings to try to influence the exchange rate of the dollar and euro, as a means of countering sharp gains in the rouble, its finance minister said on Wednesday.
The rouble has soared to seven-year highs, boosted by capital controls that include curbs on Russians withdrawing foreign currency savings, thereby eating into Russia’s export income by denting the value of dollar and euro proceeds from sales abroad of commodities and other goods.
Authorities in Russia stopped buying foreign currency via market interventions in early 2022, under a budget rule designed to shield it from external shocks, to ease pressure on the rouble at a time when it was falling sharply.
Those declines were triggered by fears of tough Western sanctions in the run-up to what Moscow calls the “special military operation” in Ukraine that began on Feb. 24.
Finance Minister Anton Siluanov said that, under a “modified” budget rule, his ministry was ready to step in and accumulate other currencies in its reserves.
“Through the currencies of friendly countries, through cross-rates with the dollar and the euro it will be possible to regulate the cost of the euro and the dollar to the rouble,” he told a conference organised by a Russian business lobby group.
“…We will discuss this with the economic bloc in the government. The central bank has agreed.”
Central Bank Governor Elvira Nabiullina, who was speaking at the same conference, said the bank – which maintains a floating rouble policy – was ready to take part in the trade to increase liquidity in other nations’ currencies.
Exporters were ready to switch to other currencies while importers preferred dollars and euros, she said.
Siluanov gave no other details of how the scheme might work, though the rouble pared gains after his and Nabiullina’s comments, heading away from levels around 50 against the dollar that it had neared for the first time since May 2015.
With Russia looking for ways to soften the sanctions blow on its financial sector, Siluanov said his ministry would also suggest allowing export-focused companies to receive proceeds from non-residents in cash.
The Moscow currency exchange this week started trading the South African rand and the Armenian dram, and is preparing to launch trading in the Uzbek sum and the United Arab Emirates dirham. It has been trading the Chinese yuan for years.