Russia is considering buying China’s yuan, India’s rupee and Turkey’s lira for its wealth fund under a budget mechanism that uses excess income from energy sales.
The central bank revealed a possible mix of currencies for the first time in a report on the policy outlook for the next three years on Friday. It said that others may be included in future, but did not give any specifics.
A good amount of investments from the Wellbeing Fund shall also go into domestic projects from 2022-2025 as they are mandatory to help the economy adapt to changed circumstances as a result of sanctions, according to the report.
As due to the war in Ukraine, euro and dollar purchases are ceased by international sanctions, Finance Minister Anton Siluanov has given indications that Russia may resort to other currencies to fill up the Wellbeing Fund. It shall possibly invest in the yuan as it expands trade with Asia.
Bank of Russia’s governor, Elvira Nabiullina had warned against using volatile currencies, while supporting a return to saving windfall income from oil and gas sales. The central bank had before asked the government to order state companies to convert their foreign exchange money into the currencies of the nations that have not joined hands in sanctions against Russia.
The Finance Ministry is working on changes to the budget rule, which was suspended over the sanctions imposed after President Vladimir Putin ordered the invasion of Ukraine. It’s seeking to buy currencies from countries listed as “friendly” by Russia.
The wealth fund expanded the most since July 2019 in May on soaring energy prices but fell to just under $200 billion last month. Yuan-ruble trading reached a record at the Moscow Exchange last month.