By Elena Fabrichnaya
MOSCOW (Reuters) – Major Russian banks have called on the central bank to take action to counter a liquidity shortage in the yuan, which has led to the ruble falling to its lowest level since April against the Chinese currency and that the yuan swap rate has been driven to triple digits.
The ruble fell almost 5% against the yuan on September 4 on the Moscow Stock Exchange (MOEX) after the Finance Ministry’s plans for currency interventions implied that the central bank’s daily yuan turnover would increase in the coming month drop to the equivalent of $200 million. .
The central bank sold $7.3 billion worth of yuan per day last month. The drop coincided with the placement of 15 billion yuan worth of bonds by oil giant Rosneft, which also sapped liquidity from the market.
“We cannot borrow in yuan because we have nothing to cover our foreign currency positions,” Sberbank CEO German Gref said, emphasizing that the central bank needed to participate more actively in the market.
The yuan has become the most traded foreign currency on MOEX after Western sanctions halted exchange trading in dollars and euros, with many banks developing yuan-denominated products for their customers.
Yuan liquidity is mainly provided by the central bank through daily sales and one-day yuan swaps, but also through currency sales by exporting companies.
Chinese banks in Russia, meanwhile, are avoiding currency trading for fear of secondary Western sanctions.
In early September, the banks raised a record 35 billion yuan from the central bank through its one-day swaps.
“I think the central bank can do something. Hopefully they understand the need to increase the liquidity supply through swaps,” said Andrei Kostin, CEO of the second-largest lender VTB, emphasizing that exporters also need to sell more yuan .
The acute yuan shortage also follows months of delays in payments for trade with Russia by Chinese banks, which have become wary of dealing with Russia after US threats of secondary Western sanctions. These problems culminated in August when billions of yuan were left in limbo.
Russia and China are discussing a joint system for bilateral payments, but no breakthrough is in sight. VTB’s Kostin said that since Russia’s trade with China was in balance, setting up a clearing mechanism for national currency payments should not be a problem.
