RT reported that the Central Bank of Russia announced the suspension of USD purchases on domestic exchanges from November 28 until the end of the year to reduce market volatility.
The announcement came as the Russian ruble fell to a near-record low of 114 rubles per dollar on November 27.
The Russian Central Bank also said it would continue selling foreign currency to replenish the National Wealth Fund, which currently stands at 8.4 billion rubles ($74 million) a day.
The central bank said the decision on when to resume foreign currency purchases will be based on “the situation in financial markets.” The postponed dollar purchases will be made in 2025.
The Russian Central Bank took a similar step last year in the wake of Western sanctions, suspending dollar purchases from August 10 until the end of the year to stem a sharp weakening of the ruble.
The latest slide in the ruble comes amid Western sanctions and rising geopolitical tensions. Last week, the US expanded restrictions on Russia’s financial sector, targeting the country’s third-largest bank, Gazprombank, which plays a key role in processing payments for energy exports.
The new round of restrictions could complicate foreign trade transactions and reduce the incentive to bring foreign exchange liquidity into Russia, Rosbank analysts said. The current trend of a weakening ruble could continue into 2025, they said.
Analysts predict the ruble could fall to 119.8 rubles per dollar next year due to geopolitical tensions and a lack of incentives for authorities to limit exchange rate volatility.
Experts say a weaker ruble will help the Russian government shore up its budget. Most of its revenue from energy exports comes in dollars and euros, which are now more profitable in local currency.
Russian Finance Minister Anton Siluanov pointed out that the weak ruble also benefits exporters, offsetting the negative impact of the Central Bank's high benchmark interest rate.
“I am not saying the exchange rate is good or bad,” Siluanov said, noting that a weak exchange rate would boost exports and help the government increase budget revenues in rubles.
Aleksandr Shepelev, a stock market expert at BCS World of Investments, told Gazeta.Ru news site that “a lot depends on how soon Russia will form alternative channels for inflows and outflows, capable of balancing its supply and demand.”
This will help to gradually ease the pressure on the Russian currency, the analyst noted. “While the market is seriously unbalanced and the financial authorities are in no hurry to intervene, the pressure on the ruble will continue,” he said.
In addition, the Russian ruble is under pressure from seasonal increases in import demand, a spike in budget spending typically seen at the end of the year, rising geopolitical pressures and a rising US dollar on global markets, Shepelev added.
