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Russia to use rainy day fund to buy state OFZ rouble bonds from market

Russia to use rainy day fund to buy state OFZ rouble bonds from market
Russia to use rainy day fund to buy state OFZ rouble bonds from market   -   Copyright  Thomson Reuters 2022
By Reuters

MOSCOW – Russia’s finance ministry plans to use its National Wealth Fund (NWF) to buy state OFZ rouble bonds from the market, finance minister Anton Siluanov said late on Wednesday, as Russia tries to cope with Western sanctions after its invasion of Ukraine.

The fund had 13.6 trillion roubles, equal to 10.2% of the gross domestic product initially projected for 2022, or $174.9 billion, as of Feb. 1, according to the finance ministry. At that time, the liquid part of the fund, or assets at the central bank’s accounts, stood at $112.7 billion.

“We propose to extend a list of financial assets into which the National Wealth Fund (NWF) assets could be invested to include the Russian state securities,” Siluanov said in a statement. He did not provide other details.

Foreign investors are effectively stuck with their holdings of Russian stocks and rouble-denominated bonds after the central bank put a temporary halt on payments and major overseas settlement systems stopped accepting Russian assets this week.

Foreigners held around 3 trillion roubles’ ($28 billion) worth of OFZs out of a total market of 15.5 trillion roubles, according to central bank data.

This week, Russia already said it planned to tap in to the fund as Moscow plans to temporarily stop foreign investors from selling Russian assets.

The rouble touched a fresh record low of 110 to the dollar in Moscow on Wednesday but the stock market in Russia remained closed this week until further notice from the central bank.