Russia to Quadruple FX and Gold Purchases to Rebuild Wealth Fund and Rein In the Ruble

Russia's Finance Ministry said Wednesday, June 3, that it will sharply increase purchases of foreign currency and gold over the coming month, spending 208.2 billion rubles ($2.81 billion) between June 5 and July 6 — daily purchases of 9.9 billion rubles ($133.7 million). After accounting for previously scheduled offsetting operations, the central bank's actual daily market purchases on the government's behalf will total 5.3 billion rubles ($71.6 million), making the net volume 4.4 times higher than in May, when daily purchases ran at 1.2 billion rubles ($16.2 million).

The operations, executed by the Bank of Russia under the fiscal rule, are funded by additional oil-and-gas revenues generated by crude prices driven higher by the Middle East war. The Moscow Times reported the move highlights Moscow's effort to rebuild the National Wealth Fund — the reserve used to plug budget gaps through three years of war spending — while easing upward pressure on a ruble whose strength has eroded export revenues and budget receipts.

The ministry had only resumed fiscal-rule FX operations in May after suspending them in March to adjust the budget rule's baseline oil price; Russian agency AKM carried the same June purchase figures.