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Exclusive-Russia has the ability to buy yuan on the foreign exchange market by 2023



© Reuters. FILE PHOTO: Chinese yuan banknotes and Russian ruble are seen between the flags of China and Russia in this illustration photo taken September 15, 2022. REUTERS/Florence Lo/Illustration /File Photo

By Elena Fabrichnaya

MOSCOW (Reuters) – Russia will start buying yuan on the money market next year if oil and gas revenues live up to expectations, two sources said, opening a new front in the dollar-free effort. Rapid globalization is designed to reduce dependence on Western finance.

Western sanctions against Moscow due to its actions in Ukraine have restricted the use and access of the dollar and euro, and the role of the Chinese currency in the Russian economy is growing. fast.

According to Refinitiv data, daily yuan-rouble trading volume on the Moscow Exchange has exceeded dollar-rouble trading on a number of days, a trend that will be emphasized in 2023 when the order Oil embargoes and price caps squeeze traditional Russian export routes.

Russia stopped intervening in the foreign exchange market in February due to restrictions on the use of foreign exchange reserves after sending tens of thousands of troops into Ukraine.

The interventions will continue next year in yuan, two sources told Reuters, provided that revenues from oil and gas exports exceed 8 trillion rubles as outlined in the budget plan. book.

“The central bank can now buy the yuan,” a banking source close to the monetary authorities told Reuters. But the bank will not do so while the government continues to spend its oil and gas revenues as it is.

“(However), if next year’s budget revenue from oil and gas exports exceeds 8 trillion rubles, then the central bank will buy yuan,” the source added.

Under the budget rule, designed to replenish state reserves, oil and gas revenues above that figure now go to the National Wealth Fund (NWF), which Finance Minister Anton Siluanov said is equivalent to with oil price of 62-63 USD/barrel.

The central bank and the finance ministry did not respond to requests for comment.

Russia has for years adopted prudent fiscal policies and sought to maintain a budget surplus, but is certain to run a deficit of 2% of GDP this year as Moscow ramps up spending to finance its military campaign. their own in Ukraine.

Siluanov’s ministry expects an additional 900 billion rubles of hydrocarbon revenue next year, although analysts are skeptical about the impact of the export restrictions.

‘FRIENDLY’ CURRENCY

A senior government source confirmed that next year’s foreign exchange interventions will be in yuan.

“We have a lot of friendly coins. On the exchange, it’s the most traded, it’s the friendliest by far,” the source said.

Russia considers countries not participating in Western sanctions as “friendly”.

Bank sources said the central bank’s operations with the yuan would be protected from sanctions and freezes. About $300 billion worth of Russian government assets have been frozen since the conflict in Ukraine began.

A government source said a decision on the interventions within the framework of the budget rule is needed to start accumulating reserves and the plan will be announced as soon as the authorities approve it.

At the start of this year, the yuan accounted for 17.1% of Russia’s foreign exchange and gold reserves, the most recent available data. Central Bank Governor Elvira Nabiullina last week said Russia has enough money in yuan and gold.

Last week, MOEX Group said that the yuan has accelerated significantly into Russia’s markets and trade flows, with its share of the currency market reaching 48% in November, up from less than 1%. at the beginning of the year. .

Moscow Exchange, Russia’s largest stock exchange, will expand the range of yuan-denominated instruments it offers next year, changes that exchange head Yuri Denisov said will allow traders hedge currency risks and increase liquidity for the yuan.



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