Breaking News
Get Actionable Insights with InvestingPro+: Start 7 Day FREE Trial Register here
Investing Pro 0
Ad-Free Version. Upgrade your Investing.com experience. Save up to 40% More details

Ruble Drop Forces Halt in Central Bank’s FX Purchases

Forex Jan 24, 2022 09:18AM ET
Saved. See Saved Items.
This article has already been saved in your Saved Items
 
© Reuters. Ruble Drop Forces Halt in Central Bank’s FX Purchases

(Bloomberg) -- The Bank of Russia said it’s halting purchases of hard currency in a bid to ease pressure on the ruble, which has slumped amid tensions over Ukraine.

Policy makers are suspending buys of foreign exchange on the open market in order to “reduce financial market volatility,” according to a website statement. The central bank conducts the transactions for the Finance Ministry as part of Russia’s fiscal rule, which is aimed at reducing the economy’s exposure to fluctuations in oil prices. 

Read More: Ukraine Risk Roils Treasuries to Commodities as Tensions Rise

The latest pause comes amid mounting tensions with the West over Russia’s troop buildup near the border with Ukraine. The last time the central bank halted the buying was over two years ago, when the covid pandemic was first spreading, hobbling markets globally. 

While President Vladimir Putin has repeatedly said that Russia has no plans to invade, local markets took a fresh leg lower on Monday after the U.S. ordered family members at its embassy in the Ukrainian capital to leave. 

“The central bank doesn’t want regular FX purchases linked to the budget rule to be an additional source of the selling pressure on the ruble,” said Piotr Matys, a senior currency strategist at InTouch Capital Markets Ltd. in London. 

“Unless investors witness concrete steps to de-escalate and Russia withdrawing or at least reducing its troops at the border with Ukraine, the path of the least resistance should remain to the upside in USDRUB,” he said.

The Russian currency pared losses after the announcement, trading down 1.9% at 78.68 per dollar as of 4:36 p.m. in Moscow, still the steepest slump in emerging markets on the day.  

At times when oil prices are high, the central bank buys foreign currency for its reserves. Purchases have been running at the equivalent of 36.6 billion rubles ($463 million) a day. Rebounding commodity prices have seen central bank reserves, which include the government’s wealth fund, swell to more than $600 billion. 

(Updates with analyst comment, background from fourth paragraph)

©2022 Bloomberg L.P.

 

Ruble Drop Forces Halt in Central Bank’s FX Purchases
 

Related Articles

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with other users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind:  

  •            Enrich the conversation, don’t trash it.

  •           Stay focused and on track. Only post material that’s relevant to the topic being discussed. 

  •           Be respectful. Even negative opinions can be framed positively and diplomatically. Avoid profanity, slander or personal attacks directed at an author or another user. Racism, sexism and other forms of discrimination will not be tolerated.

  • Use standard writing style. Include punctuation and upper and lower cases. Comments that are written in all caps and contain excessive use of symbols will be removed.
  • NOTE: Spam and/or promotional messages and comments containing links will be removed. Phone numbers, email addresses, links to personal or business websites, Skype/Telegram/WhatsApp etc. addresses (including links to groups) will also be removed; self-promotional material or business-related solicitations or PR (ie, contact me for signals/advice etc.), and/or any other comment that contains personal contact specifcs or advertising will be removed as well. In addition, any of the above-mentioned violations may result in suspension of your account.
  • Doxxing. We do not allow any sharing of private or personal contact or other information about any individual or organization. This will result in immediate suspension of the commentor and his or her account.
  • Don’t monopolize the conversation. We appreciate passion and conviction, but we also strongly believe in giving everyone a chance to air their point of view. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at Investing.com’s discretion.

Write your thoughts here
 
Are you sure you want to delete this chart?
 
Post
Post also to:
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
 
Are you sure you want to delete this chart?
 
Post
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's Investing.com's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Continue with Google
or
Sign up with Email