Russia weighing  yuan, rupees, Turkish lira purchase for rainy day fund

Russia is considering purchasing the currencies of “friendly” countries such as China, India and Turkey for its wealth fund after having lost the ability to buy dollars or euros due to sanctions, Reuters reported on Friday, citing the central bank.

Moscow is weighing the move as part of a budget mechanism that uses excess income from energy sales into the National Wealth Fund (NWF) for rainy days, it said.

The bank’s monetary policy for 2023-2025 listed a possible mix of currencies for the first time,  in a bid to return to the fiscal rule and replenish the NWF,  Reuters said, in light of Western sanctions against Russia its war with Ukraine/

Russia for four months has been grappling with a series of financial, trade, and travel sanctions imposed by Western governments in late February in response to Moscow’s invasion of Ukraine. 

Western countries have targeted wealthy individuals, banks, businesses and state-owned enterprises in Russia, which believed to have defaulted on a $100 million debt in June for the first time since 1998, after missing a key deadline, BBC reported.

“The Russian Ministry of Finance is working on the possibility of implementing an operational mechanism of the budget rule mechanism for the replenishment/spending of the NWF in currencies of friendly countries (yuan, rupees, Turkish lira and others),” Reuters cited the central bank as saying.

Russian Finance Minister Anton Siluanov has previously indicated that Moscow may turn to other currencies to top up the NWF and possibly invest in the yuan as it expands trade with Asia, Bloomberg reported on Friday.

Moscow was severed from the Western financial system by sanctions in the early days of its war with Ukraine, but Beijing has reaffirmed support for Russia in recent years and India has purchased Russian oil for cheap since the invasion.

Earlier this mean, Turkish President Recep Tayyip Erdoğan agreed that Turkey would start paying for some of its Russian natural gas imports in rubles as part of the two countries’ deepening cooperation.

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