Bank of Russia pauses foreign currency purchases as ruble nears 100 per US dollar

With an aim to help theruble, which has fallen to its lowest value in 16 months, the Bank of Russia has decided to stop buying foreign currency in the domestic marketfor the rest of 2023.

The decision comes as the ruble has lost about 24 percent of its valuethis year. The ongoing decline in its value makes Ruble one of the three worst-performing currencies,along with the Turkish lira and the Argentine peso.

The rubletraded above98 per dollar on Wednesdayand is getting close to 100 per dollar-mark, alevel last seen in March 2022.

Add WION as a Preferred Source

The Bank of Russia has also released figures showing a decline in the country's current account surplus, which is the difference betweenexports andimports. In the first seven months this year, the surplus dropped to $25.2 billion from $165.4 billion in the same period last year. In July alone, the surplus was $1.8 billion, down from $17.8 billion in the previous year.

Elvira Nabiullina, the central bank's governor, has pointed to worsening global trade conditions as the main reason for the weakening ruble. However, she has ruled out taking action to boost the currency.

The ruble's value has almost halved since its peak last year due to increased government spending, lower income from oil, and Russians choosing to invest in accounts outside the country.

The latest data shows that major Russian exporters sold 84 per cent of their foreign earnings in the domestic market in June. However, their revenues, an important source of fundingfor Russia, dropped to $6.9 billion in July from $16.8 billion the previous year.

While the amount of goods Russia buys from other countries remains steady, there are limitations on how much Russia can sell, especially when it comes to oil.

There is also an artificiallimit on the price of oil tomake it harder for Russia to fund its war activities. Moreover, the amount of money coming into Russiais declining, while the country expands itsinternational trade in ruble.

(Inputs from Reuters)

WATCH WION LIVE HERE