January 27, 2023

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Russia is trying to save the budget. Falls into a vicious circle

Russia’s finance ministry and central bank said last week that they would resume foreign exchange interventions for the first time in nearly a year, selling 54.5 billion rubles (about $793 million) of yuan. The sale began on January 13 and will run for three weeks.

Russia is using its $186.5 billion rainy days fund as of Dec. 1 to fund a widening budget deficit and stabilize the economy in the face of tougher Western sanctions over Russian energy sales.

However, analysts say selling foreign currency will strengthen the ruble, further depressing earnings for the Russian ruble as oil and gas export revenues depend largely on global dollar reference rates.

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