Russia announced it will boost its sales of Chinese yuan by 17% starting February 7, a move aimed at supporting the ruble in the face of Western sanctions and global forex market turbulence. This decision follows a reduction in foreign currency and gold purchases by the finance ministry, which will increase the state's overall forex sales, providing further support for the ruble.
The finance ministry's purchases of foreign currencies and gold for the period from February 7 to March 6 will amount to the equivalent of 66.5 billion roubles, or 3.3 billion roubles a day, down from 70.2 billion roubles, or 4.1 billion roubles a day, in the previous period. This implies that the overall net forex sales by the government and the central bank will rise to 5.56 billion roubles per day from 4.76 billion roubles previously.
The central bank's ability to buy and sell dollars and euros is restricted due to Western sanctions imposed over Russia's actions in Ukraine. As a result, China's yuan, now the most traded foreign currency in Russia, has become the regulator's primary instrument for forex interventions.
The ruble has already gained 13% against the dollar this year, driven by lower demand from Russian importers during the New Year holiday season and despite new Western sanctions targeting oil sales. However, the central bank acknowledged that the ruble exchange rate remains volatile due to ongoing cross-border payment issues and a shrinking current account surplus.
In a separate move, the central bank reduced the volume of its yuan swap operations by 50% to 5 billion yuan, as China's Lunar New Year holiday ended and Russian banks are now able to replenish their yuan stocks.