Page 73 - RusRPTJun20

> The proceeds from the Sberbank deal (R1.5 trln).
> Unspent funds from previous budgets (R1.1 trln, according to the Finance Ministry).
> Additional borrowing.
The additional borrowing will act as a "balancing" item. If the budget deficit widens, the Finance Ministry will borrow more. The base Urals price used in the budget will remain at $42.4/bbl. The volume of FX sales from the NWF will not change if the oil price remains below the base level. If it moves above this level, the NWF would start accumulating capital again. This means that the status quo will remain in the FX market.
The CBR has received some RUB2 trillion from the National Welfare Fund
(NWF) in payment for its 50%+1 in Sberbank from the Ministry of Finance that it is using to intervene in the FX markets.
This support means that while the price of oil has collapsed by as much as 75% in April the value of the ruble fell by a modest 17%. The Sberbank funds will run out in around September when the ruble could start depreciating more quickly, but the bet it that by then the price of oil will have recovered somewhat and devaluation/inflation pressures will not be as strong.
The ruble has remained surprisingly stable in April and May despite the wild swings on the oil prices​. In the 4M20 oil prices were down by 56% but the ruble was only down 19%.
The CBR has taken in some RUB2 trillion from its sale of its stake in Sberbank to Ministry of Finance, which it will use to smooth the trading in ruble. The money will last until September say analysts when the situation is supposed to be more stable.
At the same time Russia has not seen the massive outflows of capital that were associated with the crises of 2008 and 2014 and indeed it is currently running a triple (albethem small) trade, current and budget surpluses of $3.5bn, $1.8bn and 0.2% of GDP respectively.
The ruble remained stable against the US dollar, trading at cRUB73-74/$. At the close of trading on 15 May, the Russian currency stood at RUB73.58/$(v RUB73.40/$on 8 May).
The ruble’s stability comes from the balanced state of the local FX market – in the latest review of financial market risks published by the CBR on 13 May, it was reported that non-residents slowed FX purchases by 3-fold in April v March to RUB109bn, while FX sales by the CBR slightly exceeded this volume. In addition to the CBR, non-financial organizations and other banks also offered foreign currency, selling at total of RUB140bn.
Thus, the Russian FX market remains well balanced, despite the significant drop in oil prices that led to a noticeable decline in the volume of foreign currency sold by exporters. This allowed the CBR to reduce the volume of daily FX interventions – after reaching a peak of $300mn on 22 April, CBR FX sales gradually decreased in recent weeks, falling to $150mn on 12-13 May. After CBR Head Nabiullina signaled a new “substantial” cut was possible in the near
73​ RUSSIA Country Report​ June 2020 ​ ​www.intellinews.com