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The ruble will rise thanks to investments from the NWF

The size of the National Wealth Fund increased in April. What provided the positive dynamics of the value of the fund's assets and how it will affect the ruble exchange rate, sorted out experts of the financial analytics department of FBA "Economics Today".

The ruble will rise thanks to investments from the NWF

Additional oil revenues increased

According to the Ministry of Finance of the Russian Federation, amount of the National Welfare Fund (FNB) by the end of April increased by 23 billion rubles, to 13,825 trillion rubles. This amounts to 12% GDP countries. The total income of the NWF from the placement of funds in permitted financial assets, except for money, on accounts with the Bank of Russia, was 6,3 billion rubles.

The fund's investments in securities of Russian issuers, related to the implementation of self-sustaining infrastructure projects, amounted 279 billion rubles and 4,1 billion. In ordinary shares of Sberbank and PJSC “aeroflot” posted 3,35 trillion rubles and 53,6 billion rubles, respectively. The capitalization of the Russian bank increased by two percent in April, while airlines fell by 4,6%.

The amount of liquid assets (funds in bank accounts with the Central Bank of the Russian Federation) was 8,66 trillion rubles or 7,5% VVP. Investments in debt securities of foreign states on the basis of a separate decision of the Government of the Russian Federation, without presenting requirements for a long-term credit rating, amounted 3 billion. At the end of April, the federal budget received income from the placement of funds on deposits with VEB.RF in the amount of 1,15 billion rubles.

The ruble will rise thanks to investments from the NWF

Sberbank shares will ensure the growth of the fund's assets

According to the budget rule, additional oil and gas revenues are used to replenish the NWF by purchasing foreign currency on the market. According to the Ministry of Finance, windfall profits from the sale of raw materials in April this year amounted to 209,9 billion rubles. Against this background, the regulator 6 May announced, which will be spent on the purchase of foreign monetary units 123 billion rubles, which will ensure an increase in the monetary volume of the fund at the end of the current month.

Sberbank will also provide an inflow of funds, which the 12 closes the register of shareholders in May, which will receive dividends. The amount of payments is 18,7 ruble per ordinary security. Given the block of shares on the balance sheet of the fund, profit will be approx. 210 billion rubles.

Besides, the value of the fund's assets will be favorably affected by the resumption of air traffic between the countries, mass vaccination, as well as the beginning of the tourist season in Russia. Company revenue “aeroflot” will start to grow, what will drive stock price growth, owned by the FNB.

However, the strengthening of the ruble will have a negative effect. It is due to the tightening of monetary policy by the Bank of Russia against the backdrop of high inflation in 5,79%. Regulator 23 April raised the key rate to five percent and announced, that this year will repeat this measure. This will support the national currency, but will adversely affect the value of NWF assets, since the fund keeps part of the funds in foreign currency.

The ruble will rise thanks to investments from the NWF

Reserves of the National Welfare Fund will support the demand for the ruble

NWF funds in the amount of seven percent of the country's GDP should be kept in liquid instruments. Money above this bar can be invested in the implementation of self-sustaining projects. Finance Minister Anton Siluanov said, that investments can be directed to the renewal of utility networks through the housing and communal services fund. The option of providing benefits for non-state pension funds is also being considered. (NPF), if they invest in infrastructure programs.

Besides, NWF reserves will help stabilize the foreign exchange market in the event of a drop in oil prices or the imposition of new US sanctions. This further reduces the dependence of the Russian economy on world energy prices., as well as the influence of geopolitical factors. Against the backdrop of tightening monetary policy by the Bank of Russia, this will attract Western investors to domestic debt securities by increasing their yields, which will have a positive effect on the ruble exchange rate.

Alexander Bagmanov

Published: World View Source

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