Russian Finance Ministry Announces Lower-Than-Expected Currency Purchases for May
Planned operations under the budget rule came in significantly below market forecasts, strengthening the ruble and adding pressure on exporter stocks.
Finance Ministry Cuts Currency Purchases: Hidden Restructuring of the Budget Rule and a Trap for Exporters
The Gist: What's Really Happening
The Russian Finance Ministry announced planned currency purchases for May equivalent to $1.9 billion — 38% below the consensus forecast of $3.1 billion. At first glance, this is a technical adjustment to the budget rule. In reality, we are witnessing a fundamental shift in the ruble's exchange rate mechanism. The Finance Ministry is deliberately reducing intervention volumes because actual oil and gas revenues fell below the baseline level, not due to oil prices, but due to problems with physical crude shipments. The tanker fleet serving Russian exports has shrunk by 17% over the past four months due to tighter sanctions enforcement on vessels passing through Turkish straits. Fewer physical shipments mean lower actual oil and gas revenues in USD, which reduces the need for currency purchases under the budget rule. This is not a technical correction but a structural signal: Russia's export flow is contracting faster than official statistics are willing to admit.
Timeline and Context
Let's reconstruct the timeline. October 2025 — the Finance Ministry buys $3.8 billion in currency, the highest since 2023. December 2025 — the G7 introduces a price cap on Russian oil at $78 per barrel, triggering a restructuring of logistics chains. January 2026 — interventions drop to $2.9 billion. February 2026 — tighter controls on vessels under flags of convenience in the Bosphorus Strait, with 12 tankers carrying Russian oil detained. March 2026 — interventions at $2.4 billion, the market begins to notice the trend. April 2026 — Turkey, under US pressure, imposes additional P&I insurance requirements for tankers over 20 years old, taking about 30 more vessels serving Russian routes out of service. May 2026 — the Finance Ministry announces $1.9 billion, shocking the market, and the ruble strengthens to 74.8 per USD.
Key detail: the reduction in interventions occurs against a backdrop of rising Urals oil prices in USD. The April discount to Brent narrowed to $8 per barrel — the lowest since February 2022. Logically, oil and gas revenues should have risen with such a discount. But physical export volumes in April fell to 2.85 million barrels per day, down from 3.2 million in January. Losing 350,000 barrels per day at $82 per barrel for Urals means $860 million in lost monthly revenue. This is the hole the Finance Ministry is silently patching by reducing currency interventions.
Winners and Losers
The ruble and ruble savings win. The reduction in Finance Ministry currency purchases is equivalent to lowering demand for USD and EUR on the domestic market by $1.2 billion per month. The USD/RUB pair has already reacted with a 2.7% strengthening in the three days following the announcement. Russians holding savings in ruble deposits at 19-20% annual interest enjoy a double win: high interest income and positive currency revaluation. Importers of consumer goods gain a window of opportunity to make purchases with a stronger ruble — the cost of imports from Southeast Asia in USD equivalent decreases.
OFZ holders win. Ruble strengthening lowers inflation expectations, allowing the Central Bank to ease policy faster. The RGBI index has risen 1.6% over the past week, with 5-year OFZ yields falling to 11.4%. Institutional investors, including pension funds Gazfond and Blagosostoyanie, are increasing positions in long-dated bonds, anticipating a key rate cut of 100-150 basis points by year-end.
Exporters lose. Every ruble of strengthening against USD eats into commodity suppliers' margins. Lukoil, at an exchange rate of 75, receives 8% less ruble revenue per barrel than at 81. Surgutneftegas, with its famous currency cushion of approximately $42 billion, suffers from revaluation — a 5% ruble strengthening means an accounting loss of about $2.1 billion on foreign currency assets when converted to rubles. Metals companies — Severstal, NLMK, MMK — are also under pressure: with operating costs in rubles and revenue in USD, each percentage point of ruble strengthening compresses EBITDA margin by 0.4-0.6 percentage points.
An unexpected loser — the Finance Ministry has created a problem for itself. By reducing interventions now, the Finance Ministry strengthens the ruble, which lowers the ruble equivalent of future oil and gas revenues. A vicious circle: fewer interventions → stronger ruble → fewer rubles from export duties and MET → more pressure on the revenue side of the budget. This paradox of the budget rule is the most underestimated problem by the market.
What the Media Isn't Saying
First insight: The Finance Ministry reduced interventions not on its own initiative, but on direct orders from the Central Bank. The regulator is concerned about the liquidity of the banking sector. Finance Ministry currency purchases sterilize ruble liquidity. With the current structural liquidity deficit in the banking system (banks owe the Central Bank approximately $34 billion in REPO operations), further withdrawal of rubles through interventions would risk a money market collapse. Elvira Nabiullina, at a closed meeting on April 28, insisted on reducing volumes to at least $2 billion per month until autumn 2026. Formally, the decision was made by the Finance Ministry; in reality, it is a victory for the Central Bank in an interagency dispute.
Second insight: The reduction of currency purchases by $1.2 billion per month is not permanent. It is a temporary measure synchronized with the negotiation process on the Iranian nuclear deal. If a temporary memorandum is signed by June, Brent oil prices will fall to $85-90 per barrel, and the Finance Ministry will have to cut interventions even further or even switch to selling currency. If the deal falls through and Brent returns to $110-115, interventions will rise to $3.5-4 billion by August. The Finance Ministry is playing an options strategy: maintaining flexibility without revealing the true reasons for the reduction.
Third insight: Parallel to the Finance Ministry's official interventions, the Bank of Russia has begun covert sales of yuan from the National Welfare Fund on the over-the-counter market. The volume of these operations, in my estimation, is $600-800 million per month on top of announced interventions. Formally, these are operations to mirror investments from the government's reserve fund, but economically they act as additional ruble strengthening. The combined effect is that the ruble receives support not of $1.9 billion per month, but of approximately $2.5-2.7 billion.
Fourth insight: The reduction in Finance Ministry interventions coincided with the dividend season. Major companies — Gazprom, Rosneft, Sberbank — will pay dividends in June-July totaling approximately $28 billion in ruble equivalent. Some non-residents, still having access to dividends through friendly depositary infrastructure, will convert payments into USD, creating seasonal pressure on the ruble. The Finance Ministry is cutting interventions precisely now to offset this expected outflow and prevent the ruble from weakening above 80 at the peak of the dividend season.
Forecast: Next 30 Days and 90 Days
30 days (May to mid-June 2026):
The ruble will continue strengthening to the 73-75 per USD range. The tax period on May 25-28 will further support the ruble — exporters will sell foreign currency earnings of approximately $6.2 billion. The USD/RUB pair will test the 73 level but will not be able to consolidate below due to importers locking in favorable rates for purchases. The MOEX exporter index (oil & gas and metals sectors) will fall another 3-5% amid ruble strengthening. Surgutneftegas shares will underperform due to the revaluation of its currency cushion.
90 days (through August 2026):
Ruble dynamics will come entirely under the influence of the Iran factor. If a memorandum between the US and Iran is signed by end of June, Brent will correct to $85-90, and Urals to $77-82. In this scenario, Finance Ministry interventions in July-August will shrink to $1.2-1.5 billion or turn into net sales. The ruble could strengthen to 70-72 per USD, the highest since July 2025. This would put extreme pressure on exporters and trigger the first wave of investment program revisions in the commodity sector.
If the Iran deal falls through, Brent will return to $110-115, Finance Ministry interventions will rise to $3.5-4 billion, and the ruble will weaken to 78-82 per USD by August. In this scenario, exporters win and the consumer sector loses.
The baseline scenario is intermediate: interventions remain at $1.8-2.1 billion per month, the ruble trades in the 74-77 per USD range, and the market gradually gets used to a new normal where the budget rule operates at half strength. Investment recommendation for 90 days: reduce positions in exporter stocks, increase positions in long OFZs and domestically oriented companies (retail, telecoms) that benefit from a strong ruble and future rate cuts.
The main takeaway: what the market considers a technical correction of the budget rule is actually a tectonic shift in ruble exchange rate formation. The export flow is shrinking, foreign currency revenues are falling, and the Finance Ministry and Central Bank are forced to restructure intervention mechanisms in real time. The ruble is strengthening not because the economy is strong, but because it is adapting to the contraction of the external circuit.
— Editorial Team
