The goal of increasing Russia’s gross international reserves (GIR) to $500bn is not longer a priority for the Central Bank of Russia (CBR), the deputy head of the regulator Xenia Yudaeva told on October 12, as cited by Reuters.

The $500bn target was set by the CBR in 2015, as the currency market stabilised after extreme volatility of 2014, and has been reiterated by the governor of the central bank Elvira Nabiullina until the spring of 2018. Bloomberg claimed back in 2015 that setting a Fx/gold buffer of $500bn was a direct “recommendation” of President Vladimir Putin, which was resisted by the central bankers.

By the end of In August 2018 Fx/gold reserves of the CBR increased by $36.bn year-to-date to $460.6bn, mostly on the back of Fx purchases for the finance ministry from extra oil and gas revenues. 

But in September 2018 along with front-loading the key interest rate by 25bp to 7.5% the CBR halted purchases of foreign currency off the market as ruble came under increased pressure from possible toughening of sanctions. 

The central bank commented that while ruble remains essentially free floated, the regulator will act against any excess volatility of the national currency.

Analysts surveyed by Vedomosti daily on giving up the $500bn reserves target is in line with the CBR's guidance that accompanied latest policy action: the priority is to keep the real ruble exchange rate stable given the oil price level, and topping up reserves comes next.

Even without further active accumulation the Fx/gold reserves almost fully cover Russia's public and private external debt that declined by 4.8% in the third quarter to $467bn, the lowest since mid-2000s. As seen in the latest current account data, financial flows showed the largest single quarterly decline in the external liabilities of the non-financial sector since 4Q14.