The Russian central bank has felt the tightening of Western sanctions and is considering options for its reserves in currencies that are even less stable and liquid than the Chinese yuan. Business Insider writes referring to the report of the Central Bank of the Russian Federation, UNN reports.
The exchange rates of these currencies are highly volatile, the markets have low liquidity, and in a number of these countries there are restrictions on capital flows, which is an obstacle to their use.
Details
The Bank did not specify which currencies or countries were involved. However, the state of growing isolation for Russia, and the increase in countries "unfriendly" to Russia, has forced them to consider all alternative ways. In particular, the Russian central bank has stated that the role of the yuan as an international currency and its liquidity have "significantly" increased in recent years.
These factors determine the key role of the Chinese yuan in the formation of reserve assets.
Business insider emphasized that Russia's growing dependence on the yuan indicates that its economy is becoming increasingly isolated in the international trade and finance system. It also indicates that the yuan is rising as a rival to the US dollar as an international trade and reserve currency.
Russia's central bank also informed about the availability of international reserves worth $599 billion in 2023, including $300 billion frozen by the West, which the US and EU want to transfer to Ukraine's recovery.
Optional
Countries around the world that joined the dollar-based global financial system to punish Russia have been forced to turn to alternative currencies, including the yuan, to diversify.
However, Russia has managed to keep its economy alive after two years of war against Ukraine. Today, the Russians have refocused their trade from the West to the East and alternative markets like India and China. And to circumvent the Western ban on the use of SWIFT by some Russian banks, the Russian president has called on entrepreneurs to trade in local currencies.
Китайський юань замінив долар як найбільш продавана валюта в росії04.04.23, 19:29 • [views_1060245]
However, Moscow is increasingly hampered by the tightening of Western sanctions, especially secondary sanctions against companies still doing business with Russia.
However, analysts point out that Moscow's dependence on the Chinese yuan is fraught with serious risks.
Китайський юань замінив долар як найбільш продавана валюта в росії04.04.23, 19:29 • [views_1060245]
Last month Bloomberg wrote that Russian companies that borrow in Chinese yuan are facing rising borrowing costs. It was reported that the cost of borrowing for short-term bonds in yuan even briefly jumped to 15.7% on March 1, before falling to 4% a few days later.