…By buying up Chinese Yuan on the currency market
Putin is sure not sitting and grappling with the effect of Western sanction. Reports yesterday said he currently on a plan to start making purchases of the Chinese currency, Yuan, on the currency market in 2023 if the country’s oil and gas revenues meet expectations.
The potential move by Moscow, according to Reuters, is aimed at further reducing Russia’s dependence on the US dollar and Western finance.
Last February, Russia stopped intervening on the currency market after its use of foreign exchange reserves was restricted by Western sanctions following Moscow’s invasion of Ukraine.
Following its limitations with the Dollar and Euro currencies, Russia has since accelerated its shift toward China’s currency [Yuan]. Reuters quoted two unnamed sources hinting that the interventions will resume next year in Yuan as long as revenues from oil and gas exports surpass 8 trillion rubles ($116.57 billion) as set out in budget plans.
The central bank can currently buy Yuan, a banking source close to monetary authorities told Reuters. But the Bank of Russia wouldn’t do so while the government continues to spend its oil and gas revenues.
“(However), if next year budget revenues from the export of oil and gas exceed 8 trillion rubles, then the central bank will buy Yuan,” the source said.
The Yuan’s share of the Russian currency market has risen to as much as 45%, up from less than 1% at the start of the year, the Moscow Exchange told Reuters last month.
Daily Yuan-ruble trading volumes on the Moscow Exchange have exceeded dollar-ruble trades on some days, Reuters reported, citing Refinitiv data, a trend that may strengthen next year as an oil embargo and price cap squeeze Russian exports.
By Bosco Agba