Currency value plunges to historic lows.
The Plunge in Corporate Currency Purchases
April's corporate currency purchases by bank clients, including non-residents, clocked in at a measly 1.8 trillion rubles, marking a stark contrast to the average monthly figure of 2.5 trillion rubles in Q1 2025, as reported by the Bank of Russia. This April low hasn't been seen since the partial suspension of currency trading on the Moscow Exchange in July 2024. Let's unpack what's going on here.
Experts, like Dmitry Tselyushev, Managing Director of Ricom-Trust, attribute this drop to a couple of factors. First, the prolonged strengthening of the ruble. Second, the restrictive credit conditions imposed by some banking institutions for withdrawing currency abroad, even for payments of goods/services.
Individuals also contribute to this downturn, purchasing approximately 68.5 billion rubles worth of currency across the exchange and over-the-counter markets—a significant decrease from March's 88.2 billion rubles. Analysts initially expected a traditional increase in euro, yuan, and dollar demand to cover holiday expenses before the May break. Oops.
The spread for buying/selling cash foreign currency saw mixed results. The gap between US dollar operations decreased from 2.99 to 2.73 rubles, whereas the euro operations gap increased from 2.90 to 3.17 rubles. This difference can be attributed to the weakening of the dollar against the euro and the limited number of banks operating with the euro, creating a sort of euro scarcity that inflates spreads.
Major exporters netted $10.0 billion in currency revenue on the Russian market last April, a 2% decrease from the previous month. This decline is likely due to the continual downward trend in oil prices on the global markets. Meanwhile, the ratio of net currency sales to export revenue by major exporters in February 2025 reached 99%, with the highest value of 115% being recorded in June 2024 during dividend payment preparations.
In a broader look at bond market dynamics, "AAA"-rated securities saw an increase in yields by 15 basis points, while securities rated "AA" and "A" dropped by 15 and 60 basis points, respectively. Meanwhile, "BBB"-rated bonds plummeted by 104 basis points. The difference in yield movements can be primarily attributed to investor demand for lower-risk bonds.
Overall, the volume of the corporate bond market by outstanding nominal increased by 398 billion rubles, reaching 29.9 trillion rubles. In April, systemically significant credit organizations (SZKOs) were the main net sellers on the exchange market for corporate bonds but remained the largest net buyers when primary market purchases are included. This oddity can be explained by the practice of buying new bonds at a discount and then selling them for profit.
On the other hand, the OFZ market saw SZKOs as the largest sellers, selling securities for 32.1 billion rubles (compared to 225.9 billion rubles in March). However, taking into account primary auction purchases, net purchases were 123.0 billion rubles—a clear sign of renewed interest from large investors in government bonds.
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Finance and business sectors might be affected due to the decrease in corporate currency purchases, as the low figure of 1.8 trillion rubles in April 2025, compared to the average of 2.5 trillion rubles in Q1 2025, could deter investing in Russian markets. Furthermore, the restrictive credit conditions imposed by some banking institutions for withdrawing currency abroad could hinder business activities that require foreign currency transactions.
