Russia plans to sell more Chinese yuan from its wealth fund this month as oil and gas revenue weakens. The Kremlin expects to sell 74.6 billion rubles worth of foreign currency in June. Oil and gas revenue last month fell short of expectations by 30.6 billion rubles. Loading Something is loading.
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Russia is ramping up sales of foreign currency held in its wealth fund as oil and gas revenue weakens on lower energy prices.
The finance ministry said last week that from June 7 to July 6, about 3.6 billion rubles worth of foreign currency will be sold each, for a total of 74.6 billion rubles ($900 million) for the month.
Most of the foreign currency held in the National Wealth Fund is in yuan, and transactions in Western currencies are limited by sanctions. In May, the Kremlin sold 2.6 billion yuan and 3.85 tons of gold for a total of 49 billion rubles.
The latest foreign exchange sales come as Russia’s oil and gas revenue last month fell short of expectations by 30.6 billion rubles.
Brent crude oil prices have dropped 17% over the last two months as demand has come in lower than expected while supplies have been higher than expected.
China’s disappointing economic rebound from zero-COVID policies has weighed on demand. At the same time, Russia has appeared to not cut its production as promised with oil exports continuing to hit highs.
Since Russia’s reserves of Western currencies were frozen after its invasion of Ukraine last year, Moscow has primarily relied on its stockpile of Chinese yuan sitting in its wealth fund to cover budget deficits, which have been under more pressure amid increased military spending.
In April, the International Energy Agency said Moscow’s revenue was down about 43% from a year ago.
The squeeze on the Kremlin’s budget comes as Russia’s central bank has raised alarms about the economy as the falling ruble and record labor shortage add inflationary pressures.