The foreign currency and gold reserves of the Central Bank of Russia (CBR) dropped by big $8bn, or 2.1% week-on-week, to $379bn on the week ending December 16, the regulator said on December 22.

The reserves have taken a hit as the budget spending by the Finance Ministry traditionally soars in the end of the year. Absording the foreign currency inflow of the recent major $11bn privatisation deal of Rosneft oil major might also have influenced the number. Also last month the Ministry of Finance said it would draw down RUB1 trillion ($16bn) from the Reserve Fund to meet end of year budget payments.

According to the CBR, the reserves declined on the reporting week mostly on repo operations to commercial banks. After approaching a $400bn threshold in the beginning of the fall,  the reserves have scaled back stredily in the past weeks. 

After dropping by over a third from a post-2008 peak of $500bn, the decline of the reserves was halted by the CBR's decision to free float the ruble exchange rate in November 2014.

This eased the need to spend the reserves to support falling currency exchange rates, while the CBR introduced a variety of other instruments to supported forex liquidity and stability of the financial system.

The weaker ruble became advantageous in 2015 as a more than halving of oil prices created a need to shield the ruble-denominated revenues of the energy exporters, the main contributors to the state budget.

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