The Russian finance ministry plans to increase purchases of foreign currency for its reserves next year, reducing rouble volatility in a presidential election year, the Finance Minister said yesterday.

After two years of recession and a draining of reserves amid a sharp drop in the price of oil, Russia’s key export, the finance ministry has decided to replenish coffers and insulate the rouble by setting a budget rule.

According to the rule, the finance ministry will buy dollars and other foreign currency when Russia’s crude blend Urals trades above $40 per barrel, the level factored into the budget. The higher the oil price, the bigger the forex purchases would be.

Finance Minister Anton Siluanov said the finance ministry could spend around 2 trillion roubles (£26.19 billion) on foreign currency next year if Urals prices are at $54-55 per barrel. Urals crude last traded at $64.35 per barrel.

“This would more than offset the envisaged reserves spending next year,” Siluanov said, adding that his ministry would increase foreign exchange purchases next year up to 70 per cent of non-oil and gas budget revenues from around 30-40 per cent at present.

Speaking to reporters, Siluanov said the increased foreign currency purchases would reduce the rouble’s vulnerability to volatility on capital markets in 2018.