From August 1, the Central Bank will start selling the yuan in the market under the NWF investment in addition to the fiscal rule

MOSCOW, July 21 (Reuters) – From August 1, 2023, in addition to regular interventions under the fiscal rule, the Bank of Russia will start selling/buying foreign currency related to investing funds from the National Welfare Fund (NWF) in financial assets denominated in rubles, the regulator said.

“Taking into account the liquidity of the domestic currency market, the Bank of Russia sets a limit on the maximum total amount of such transactions for the first half of the year in the amount of 300 billion rubles. If the actual investment volume of the National Wealth Fund for the reporting period exceeds a certain value, the surplus amount is transferred to be reflected in subsequent periods, the regulator wrote.

From January 1 to June 30, 2023, the net volume of operations to allocate NWF funds in eligible ruble-denominated financial assets amounted to RUB 288.4 billion. So, from August 1, 2023 to January 31, 2024, the daily volume of these operations of the Bank of Russia will be 2.3 billion rubles, the central bank said.

The actual daily volume of net operations of the Bank of Russia in the foreign exchange market will be determined as the balance of two values: the volume of regular operations according to the budgetary rule and the volume determined on the basis of the amount of investments from NWF.

In order to minimize the impact of these operations on the exchange rate dynamics, the Bank of Russia will buy or sell foreign currency on the market evenly throughout the trading day.

Mirror operations will be carried out in the currency section of the Moscow Stock Exchange in the instrument “Chinese yuan – ruble” with the settlement date “tomorrow” evenly over the next six months after the settlement period with a shift forward by one month. (Elena Fabrichnaya, Daria Korsunskaya)