Background on the Russian Central Bank and its Role
The Russian Central Bank, also known as the Bank of Russia, is responsible for managing the country’s monetary policy and maintaining price stability. It plays a crucial role in ensuring the smooth functioning of Russia’s financial system and influencing the value of the Russian ruble.
Ruble’s Strength and Exporting Companies’ Concerns
In 2025, the Russian ruble experienced a significant appreciation of 45%, which was partly attributed to the combined foreign exchange sales by the Russian Central Bank and the Ministry of Finance. This ruble strength negatively affected exporting companies, as their profits were squeezed by the currency’s rapid appreciation.
Central Bank’s Decision to Cut Foreign Exchange Sales
On Friday, the Russian Central Bank announced that it would halve its own foreign exchange interventions starting from the New Year. This move is expected to reduce support for the ruble, causing economists to anticipate a potential weakening of the currency.
- New daily foreign exchange sales target: The Central Bank will sell foreign currency worth 4.62 billion rubles (approximately $59.81 million) per day in the first half of 2026, down from the current 8.94 billion rubles.
- Total state foreign exchange sales reduction: The overall state foreign exchange sales, including the Central Bank’s own operations and transactions by the National Wealth Fund (NWF), will decrease by 30% to 10.22 billion rubles starting January 12.
Impact on the Ruble and Exporting Companies
Sofya Donets, Chief Economist at T-Bank, stated that the Central Bank’s move is expected to contribute to the ruble’s weakening alongside falling export prices and a more accommodative monetary policy. The government refrained from using the NWF to cover budget deficits in the second half of 2025, opting instead for domestic borrowing despite anticipated low monthly oil and gas revenues.
This policy is expected to continue in 2026, assuming no further decline in energy revenues due to falling global prices or additional Western sanctions if peace talks in Ukraine yield no results.
Ruble’s Response to the Central Bank’s Announcement
The ruble did not exhibit a substantial reaction, only strengthening by 0.4% to 77.7 against the US dollar in off-exchange trading and trading flat at 11.04 against the Chinese yuan on the Moscow Exchange.
Key Questions and Answers
- What is the Russian Central Bank’s role? The Russian Central Bank manages monetary policy, maintains price stability, and influences the value of the ruble.
- Why did the Russian Central Bank cut its foreign exchange sales? The bank aims to reduce support for the ruble, which has appreciated significantly in 2025, negatively affecting exporting companies.
- How will this decision impact the ruble? Economists expect the ruble to weaken due to reduced Central Bank support, falling export prices, and a more accommodative monetary policy.
- What were the ruble’s reactions to the Central Bank’s announcement? The ruble only slightly strengthened against the US dollar and remained stable against the Chinese yuan following the announcement.
