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FILE PHOTO: Illustration shows natural gas pipeline, Russian Rouble banknote and flag By Darya Korsunskaya (Reuters) – Russia’s attempts to plug its budget deficit by selling foreign currency reserves could lead to a vicious circle that pushes the rouble higher and further reduces the Kremlin’s crucial export revenues, analysts say. Russia’s finance ministry and central bank said last week they would restart interventions in foreign exchange markets for the first time in almost a year, selling 54.5 billion roubles worth of yuan ($793 million) from the National Welfare Fund. The sales started on Jan. 13 and will run for three weeks. Russia has been using the rainy-day fund, which stood at $186.5 billion as of Dec. 1, to finance its widening budget deficit and stabilise the economy in the face of increasingly tough Western sanctions on Russian energy sales. The Kremlin relies on export taxes from hydrocarbon sales to fund its domestic spending, which has increased sharply to cover accelerating costs for the Ukraine war, now in its 11th month. But analysts say foreign currency sales will push the Russian rouble higher, thus further reducing Russia’s income in roubles since revenues from oil and gas exports are largely based […]
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