Get 40% Off
🚨 Volatile Markets? Find Hidden Gems for Serious OutperformanceFind Stocks Now

With a sale of Chinese yuan, Russia kicks off 2023 forex intervention

Published 01/11/2023, 04:54 AM
Updated 01/11/2023, 06:56 AM
© Reuters. FILE PHOTO: Banknotes of Chinese yuan and Russian rouble are seen amid flags of China and Russia in this illustration picture taken September 15, 2022. REUTERS/Florence Lo/Illustration

By Guy Faulconbridge and Darya Korsunskaya

MOSCOW (Reuters) -Russia said it would resume foreign currency interventions with the sale of yuan from Friday, underscoring the growing importance of China's currency in Moscow's efforts to ensure economic stability amid Western sanctions.

After the West imposed the most severe sanctions in modern history over the war in Ukraine, Russia's economy has shown remarkable resilience but the world's biggest producer of natural resources is now turning increasingly towards China.

Chinese students have flocked to Russian universities, Mandarin graces signs in Moscow tourist spots alongside English and Russian, and President Vladimir Putin has touted a "no limits" partnership with President Xi Jinping.

Russia's finance ministry, which along with the central bank led Moscow's economic response to the sanctions, said it would sell 54.5 billion roubles ($798 million) in foreign currency from Jan. 13 amid lower oil and gas revenues.

"In order to increase the stability and predictability of domestic economic conditions, as well as to reduce the impact of volatile energy market conditions on the Russian economy and public finances, the Finance Ministry will resume operations for the purchase/sale of liquid assets," the ministry said.

Russia's 2023 budget is based on a Urals blend price of around $70.1 a barrel, though Russia's main blend is currently trading at below $50 a barrel. Russian nominal GDP is likely to be $2.14 trillion this year, the highest level since 2013, according to the International Monetary Fund.

In Russia, where the U.S. dollar was king for years following the collapse of the Soviet Union in 1991, China's yuan, or renminbi, has become a major player in Moscow since the imposition of Western sanctions.

3rd party Ad. Not an offer or recommendation by Investing.com. See disclosure here or remove ads .

Its share of the currency market reached 48% in November, MOEX Group said last month, up from less than 1% at the start of 2022.

The Russian central bank said it would carry out forex transactions on the yuan market of the Moscow Exchange - the yuan-rouble for settlement tomorrow (CNYRUB_TOM).

"To minimize the impact of these operations on the dynamics of the exchange rate, the Bank of Russia will buy (sell) foreign currency on the market evenly during each trading day of the month," the bank said.

($1 = 68.6875 roubles)

Latest comments

No matter how many trillions of it is printed and traded no country's paper is worth more than just paper, it's all fiat money with no real value.
not exactly, but nice wishful thinking
Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.