Russia to Reduce Foreign Currency Reserves by 2.2 Billion
Russia is set to reduce its foreign currency reserves by 2.2 billion due to lower income from oil and gas exports. The country’s Central Bank said it plans to take the course of action in order to maintain a balanced budget and inflation.
The Central Bank of Russia has warned of this decision, claiming it will reduce the international liquidity of the country. They have explained that its foreign currency reserves are currently much higher than necessary, which is why it is taking this action.
The amount of money Russia will be selling corresponds to approximately 3.3% of its current international liquidity. The Central Bank has said that this should not pose any significant risks to the economy and has reassured it can be managed effectively.
The country’s ability to sell currency comes after it has recently enjoyed some of its highest foreign currency reserves in years, due to Russia’s dependence on oil and gas exports. The changes in global energy prices, however, have had a major impact on Russia’s economy.
The Bank of Russia has said that the decision to reduce their reserves reflects a more cautious policy towards foreign currency reserves, in order to maintain a balance in the budget, as well as to manage inflation and exchange rate.