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MinFin plans start FX purchases at end-August

 
09.07.2013

Yesterday, Deputy Minister of Finance Alexey Moiseev stated that beginning at the end of August the Ministry could start purchasing up to USD 40-50mn per day on the open market to replenish the Reserve Fund. He added that currently the FY13 transfer to the Reserve Fund is estimated at RUB 149bn. To calculate the maximum daily volume of MinFin’s purchases, this sum needs to be divided by the number of working days left until the end of the year. The estimate of the FY13 transfer to the Reserve Fund is to be adjusted on a monthly basis, along with the actual execution of the budget.

According to recent MinFin scenarios for FY13 (Vedomosti as of 4 July), the transfer to the Reserve Fund is set to be cut to RUB 67.5bn from the RUB 373bn set in the Budget Law (base case). The Reserve Fund could even be unwrapped and RUB 241.5bn transferred to finance the budget deficit (in a conservative scenario of lower non oil & gas revenues). Hence, even under the base case scenario we are unlikely to see more than USD 25mn of daily purchases at the start of the programme at the end of August. Moreover, there is a possibility that MinFin could actually start selling foreign currency to get money from the Reserve Fund (this probability is low, as i) we believe that the transfer to the Reserve Fund will be positive and; ii) even if it is negative, it is unclear whether it will be converted on the open market or not).

As we do not expect MinFin’s operations this year to significantly influence RUB behaviour, we are reiterating our view that RUBBASKET will mostly be at 36.5–37.5 in 2H13.

Maxim Oreshkin, Daria Isakova
VTB Capital analyst

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