Russia’s currency moves hint at oil price struggles, not just Middle East chaos

Russia plans to buy foreign cash for the first time since the Ukraine war began, but not as much as experts thought it would. The government will spend 110. 3 billion roubles—mostly in Chinese yuan—between May 8 and June 4 to top up its rainy-day fund. The idea is to keep the rouble from shooting up too fast and breaking the budget. Still, when the plan was announced, the rouble actually climbed 0. 9% against the yuan, suggesting traders were expecting even bigger moves. Why the smaller-than-expected amount? Analysts had guessed Russia would scoop up 14 to 18 billion roubles daily, but the real figure is closer to 1. 18 billion. One big reason is that April’s oil profits weren’t as huge as they looked. Even though global oil prices jumped past $100 a barrel after the Israel-Iran clashes, Russia couldn’t cash in fully. Ukrainian drones kept hitting oil ports and refineries, forcing Moscow to cut production. At the same time, the government spent big to keep petrol prices low at home—about 208 billion roubles—so the extra cash from high oil prices mostly vanished.

The whole system works like this: if oil prices rise above $59 a barrel, the government buys up foreign money for its savings fund. If prices fall below that line, it sells some of that fund to plug budget holes. Back in February, Russia paused this routine because its oil was selling at a discount thanks to sanctions. Now, with prices back up, the government is slowly restarting the buying spree—but only in smaller doses. April’s oil and gas income dropped by over 20% compared to last year, hitting 855. 6 billion roubles. That sounds bad, but it’s actually better than March’s 617 billion. The Finance Ministry also says it’ll adjust for missed sales in March and April, which will soften the shock in the market. Still, the whole situation shows how hard it is for Russia to fully benefit from global energy chaos when its own oil is stuck at lower prices and its infrastructure keeps getting hit.

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