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The Bank of Russia said it would sell an additional $2 billion in foreign exchange over the next three months, not enough to reverse the ruble’s slide but a move that could be seen as a signal of support for the embattled currency.
“The announcement should help the market start stabilizing, but we’re not out of the woods yet,” said Yury Tulinov, head of research at Rosbank PJSC in Moscow. “The volume isn’t decisive.”
Amultitude of geopolitical risks has combined with a surge in Covid-19 cases to erode investor confidence in Russian assets. The ruble is the worst-performing currency among major emerging markets this month, plunging 7.1% in large part due to concern that the Kremlin will be hit by fresh sanctions.
The currency sales will total 2.9 billion rubles ($36 million) a day in October through December, the Bank of Russia said in a statement published on its website on Tuesday. The transactions “won’t have a significant impact on the domestic market,” according to thestatement.
The central bank says it doesn’t intervene to target the ruble rate, since moving to a free-floating exchange rate in 2014. The additional sales are to convert the Bank of Russia’s proceeds from the sale of its stake in Sberbank PJSC, according to the statement.
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Part of the selloff has been caused by investors taking out hedges against the ruble to protect overweight positions in Russian government bonds, Tulinov said. Foreigners own about 29% of the outstanding debt, with holdings worth the equivalent of about $37 billion, according to central bank data.
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