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Russia May Allow Yuan Swaps with Commercial Banks: Izvestia

RUSSIA
  • Izvestia report that Russia may allow its Federal Treasury to conduct FX swap transactions with the Chinese yuan. Such transactions were earlier conducted with dollars and euros but this has become almost impossible given the current sanctions regime. The Finance Ministry has a lot of yuan accumulated in reserves whereas banks sometimes have a liquidity shortage in the Chinese currency.
  • After the emergency 350bps rate hike on Tuesday, the volume of yuan swap transactions on Moscow Exchange rose sharply and exceeded RUB 400b for the third day in a row, Kommersant report. They add that rather than selling yuan, its holders are instead transferring positions, hedging risks against the background of increased volatility on the spot market.
  • Local financial authorities instructed exporters to maximise the receipt of foreign currency proceeds to their accounts in Russian banks and increase the sale of foreign exchange, Interfax reported late Thursday. As a reminder, Vedomosti reported that the Russian authorities decided against explicitly tightening capital controls after Putin’s meeting with financial and economic officials earlier this week.

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