Russia has resumed purchases of foreign currency and gold for its National Wealth Fund for the first time since June 2023. This comes amid rising oil prices. This was reported by Bloomberg, according to UNN.
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Russia has resumed purchases of foreign currency and gold for its National Wealth Fund for the first time since June last year, as rising oil prices driven by the war in the Middle East boost export revenues. In May, the Ministry of Finance will purchase foreign currency and gold worth 110 billion rubles ($1.5 billion). This figure includes deferred transactions from March and April. The move underscores the potential windfall for President Vladimir Putin from the conflict fueled by the U.S. and Israel's confrontation with Iran,
It is noted that this gives Moscow a chance to replenish the state treasury after spending more than half of its rainy-day reserves to finance the invasion of Ukraine.
According to Russia's fiscal rule, excess energy revenues are saved when the export price of Russian oil exceeds $59 per barrel, while fund assets are withdrawn to cover budget deficits when prices fall below that level. In the first two months of the year, Russia spent about 419 billion rubles from the fund to compensate for declining oil revenues.
According to Ministry of Finance data published on Wednesday, as of May 1, the liquid assets of the National Wealth Fund stood at 3.6 trillion rubles, down 14% from January and approximately 60% lower than before the invasion of Ukraine.
However, Moscow fears that favorable conditions may be short-lived and is considering lowering the oil price threshold for replenishing the fund starting next year.
As a reminder
One of the key players in the global oil market—the United Arab Emirates—has announced its intention to suspend membership in OPEC and OPEC+. Such a move could weaken the mechanism for regulating the oil market through supply restrictions and create risks for Russia's oil export revenues.