The Ministry of Finance in may reduce the purchase of currencies eight times

In may, the Finance Ministry will buy foreign currency on ruble-denominated oil and gas windfall to eight times less than in April. Last month the Ministry of Finance has directed on purchase of currency at 69.9 billion rubles, however at the end of the month actually received a windfall of oil and gas was 46 billion rubles less than expected by the Agency. In may, the Finance Ministry predicts 54.5 billion RUB of oil and gas additional revenues. “Thus, the total amount of funds allocated for the purchase of foreign currency on the domestic foreign exchange market in the period from 10 may to 6 June 2017, is estimated at 8.5 billion rubles”, — stated in the message Department. The final figure emerged as the forecast for the oil and gas dopdohodov (54.5 billion Euro), less “error” in prediction for the previous month (46 billion).

The market will not notice

Daily net purchases amounted to only 400 million rubles, says the Finance Ministry. This is a negligible volume for the market — 0.1% of the average daily trading volume in the spot foreign exchange market of 360 billion rubles (according to the Moscow exchange in March). Traders took the Finance Ministry, rather as a positive for the ruble before the Declaration of office at 12:00 GMT the dollar traded at RUB 57,70, and immediately after the announcement — 57,62 RUB (down eight cents).

The reduction in the volume of purchases will have no impact on the exchange rate, they were previously not essential for the course, predicts economist BCS Vladimir Tikhomirov. “To some significant impact on the exchange rate to provide, you need to buy at least $200-300 million a day. Such volumes have not yet been,” he says. The value of the ruble depends on external factors, indicates Tikhomirov, such as the price of oil, the inflows and outflows of currency on the market-related actions of foreign investors, and geopolitics.

Exports of petroleum products decreased

“The negative value of the deviation [of oil and gas revenues in April] mainly due to the fact that the actual volume of export of gas and petroleum products in April was significantly lower than forecast estimates, calculated from the baseline scenario of socio-economic development of Russia”, — said in a press release of the Ministry. Another factor in the rejection was the return in April of the overpayment of previously paid customs payments, and lower exports of petroleum products was not offset by exports of crude oil. “Decreased compared to theoretical estimates of the volume of oil production. In addition, actual exchange rate of the dollar against the ruble in April formed at a lower level compared to the average March value used to estimate,” says the Finance Ministry.

But the Agency expects that with the continuation of current market conditions, the volume of funds allocated for the purchase of foreign currency, “in subsequent periods will be higher.”

Brent crude, which determines the price of Russian oil Urals, is now worth around $50.5 per barrel. compared to the April high at $56,5. In April, Russia on the average per day exported to 5.97 million barrels. oil (data from Bloomberg, citing CDU TEK), while the average price of a barrel of Urals was $51,1 (Treasury data) — means that Russia every day selling oil abroad in the amount of $305 million more than in March ($277 million, based on the same calculation), but was not enough to offset the decline in exports of petroleum products, the message of the Ministry of Finance.

The volume of oil refining in Russia in April has really decreased in comparison with March, to 0.3 million tons to 22.2 million tons, said the General Director of Agency “analysis of commodity markets” Michael Turukalov. Recycling has decreased due to stop for the repair of a number of refineries, but the plans for the repairs were announced in advance and the decline is predicted, he says. Compared to 2016 refining volume in Russia is growing, says Turukalov: January–April 2017 the volume increased by 1.8 million tons to 91.7 million tons year-on-year.

Oil and gas dopdohodov reduced

The Ministry of Finance from February forwards to purchase foreign currency oil and gas windfall obtained as a result of higher oil prices than envisaged in the Federal budget ($40 per 1 barrel.). The purchase volume has consistently declined. In February, the Agency predicted level of additional income in the amount of 113.1 billion rubles. and bought daily on the domestic currency market of 6.3 billion RUB. In March the Agency has sharply reduced the volume of purchases — to 70.5 billion rubles because of the oil exports at a level below the forecast and strengthening of the ruble to the dollar. In April, the purchase of foreign currency was sent 69,9 billion roubles, the daily procurement volume amounted to 3.5 billion rubles.

Federal budget revenues for the first quarter of 2017 amounted to 3.6 trillion rubles, or 18.1% of the GDP returned to the level of 2015, was discussed in the recent review of the Higher school of Economics “Comments on the state and business”. A substantial influence on the dynamics of income had a dramatic increase in oil and gas revenues by 53% compared to the same quarter last year, the report said. Under the influence of higher oil prices the share of oil revenues in the total budget revenues increased to 42% (vs 37% envisaged in the law on the budget for 2017).

with the participation of Catherine Kapalkina