On Bank of Russia operations related to Reserve Fund accumulation
Starting from February 19, 2014, in accordance with current procedure (Information Notice on Bank of Russia Operations on the Domestic FX Market, dated October 1, 2013), the Bank of Russia is to conduct its operations on the domestic FX market, taking into account the transfer of funds in foreign currencies by the Ministry of Finance of the Russian Federation and the Federal Treasury to the Reserve Fund in the amount equivalent to 212.2 billion roubles based on the results of 2013. The conversion of this amount will be made evenly until late May 2014 by means of the daily purchases of foreign currencies from the Bank of Russia in the amount equivalent to 3.5 billion roubles a day. The volume of the Bank of Russia interventions in case of foreign currency sales on the domestic market to smooth exchange-rate fluctuations will be reduced by the volume of the Federal Treasury foreign currency purchases from the Bank of Russia related to the accumulation of the Reserve Fund. In case of foreign currency purchases, it will be increased by the corresponding volume. This adjustment of the Bank of Russia FX interventions will exert no significant influence on the exchange-rate dynamics of the national currency.
When the value of the dual-currency basket reaches the border of the operational band, the Bank of Russia will continue to conduct its interventions under the effective mechanism of the exchange-rate policy without limitations unless the value of the dual-currency basket returns to the operational band or the borders shift automatically so that the value of the dual-currency basket gets within the new borders of the operational band. The cumulative volume of interventions leading to the shift of the operational band borders will be equal to the difference between the actual volume of operations and the volume of the Federal Treasury purchases of foreign currencies related to the accumulation of the Reserve Fund.
The calculation of the volume of the Bank of Russia operations on the domestic FX market and the cumulative interventions are illustrated in the following table:
| Dual currency basket position into the operational band | Volume of the interventions aimed at smoothing rouble exchange rate fluctuations*, millions of US dollars (1) |
Volume of the Federal Treasury foreign currnecy purchase from the Bank of Russia, millions of US dollars (2) |
Volume of the Bank of Russia net operations on the domestic FX market*, millions of US dollars (3) = (1) + (2) |
Volume of the cumulative interventions, millions of US dollars (4) = (3) − (2) |
| upper sales range | −400 | 100 | −300 | −400** |
| sales range | −200 | 100 | −100 | −200 |
| “technical” range | 0 | 100 | 0 | −100 |
| “neutral” range | 0 | 100 | 100 | 0 |
| purchases range | 200 | 100 | 300 | 200 |
| lower purchases range | 400 | 100 | 500 | 400** |
* “+” means foreign currency purchase, “−” means foreign currency sale.
** Under the applicable mechanism of the exchange rate policy as soon as the volume of the cumulative interventions reaches the set value of $350 millions, the shift of operational band borders occurs.
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