Bank of Russia commentary on FX operations related to the acquisition of Sberbank shares by the National Wealth Fund
On 19 March 2020, the Bank of Russia will start selling foreign currency in the domestic market purchased from the National Wealth Fund (NWF) as part of the deal to acquire Sberbank shares.
Due to increased volatility in the financial markets, the Bank of Russia has developed a sales mechanism intended to augment the stabilising effect of the fiscal rule amid low oil prices and therefore contribute to preserving economic and financial stability. The Bank of Russia calculated the amount of additional sales based on full replacement of the shortfall of foreign currency supply in the domestic FX market due to the decline in proceeds from the export of oil, oil products and natural gas if the price of Urals crude falls below $25/barrel.
The daily sales volume of the foreign currency proceeds from the deal will vary depending on the deviation of Urals crude below $25/barrel. Above this level, no operations will be performed.
These operations will be performed in addition to standard FX sales from NWF funds in the domestic market under the fiscal rule.
The Bank of Russia will apply this foreign currency sales mechanism in the domestic market until 30 September 2020. The Bank of Russia will announce the FX sale mechanism to be applied after 30 September 2020 in a separate notice.
