January 11, 2019 / 6:00 AM / 7 months ago

Russian c.bank says resumption of FX buying won't change market balance

MOSCOW, Jan 11 (Reuters) - The market has already priced in the resumption of foreign exchange purchases by the Russian central bank so these operations should not change the market balance, a top central bank official said in an interview released on Friday.

Alexei Zabotkin, head of the central bank’s monetary policy department, told Rossiyskaya Gazeta daily that Russia’s strong current account in the first quarter and sufficient amount of foreign currency in the financial system should help offset the impact of the state’s FX purchases on the rouble.

“This would ensure sustaining the balance of supply and demand in pretty much the same way we see it now,” Zabotkin said, playing down market concerns about the resumption of regular FX purchases.

The central bank is set to resume FX buying for state reserves from Jan. 15, restoring daily downside pressure on the rouble that eased in late August when it halted these market operations amid increased rouble volatility.

A Reuters poll showed this week that the central bank is seen buying around $4.2 billion on the market by Feb. 6.

Speaking about FX purchases that were put on hold last year but would have to be resumed at some point according to the Russian budget rule, Zabotkin said that will be “spread over several years.”

“We want to make sure that the resumption of forex purchases will not significantly affect the situation on the financial market,” Zabotkin said.

“Further decisions on additional purchases will be made when we are confident that the market is comfortable.”

The central bank’s comments are in line with the finance ministry’s view. Russian Finance Minister Anton Siluanov said last month he did not expect significant rouble volatility in 2019 under his ministry’s baseline scenario. (Reporting by Elena Fabrichnaya Writing by Gabrielle Tétrault-Farber Editing by Andrey Ostroukh & Shri Navaratnam)

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