Since the end of last year, there has been a shortage of yuan on the Russian foreign exchange market: rates on the ruble-yuan swap have become negative. The deficit could arise due to transactions of large companies or banks, writes Frank Media.
Swap rates fell sharply at the end of December, according to data from the Moscow Exchange. Since then, they have turned negative several times, the last on January 12.
The shortage of yuan developed right before the New Year, a top manager of a large bank told the publication. According to him, now the situation is gradually stabilizing. He notes that the deficit could have developed due to a major player who needed to withdraw the yuan to accounts in China at the end of the year.
Information about the deficit was confirmed by the Central Bank. The regulator noted that the situation is gradually improving. “At the beginning of the year, there is a gradual normalization of the situation with foreign exchange liquidity and the return of the foreign exchange base to “normal” levels,” the regulator’s press service said.
A currency swap is a contract in which the parties agree to conduct two transactions for the same amount, but with two different currencies and at different times. For example, first there is a purchase of a currency, and then its sale, or vice versa. The terms of swaps can be different – a day, a week, a month, and so on.
Companies with the help of swaps insure the risks from sharp changes in the value of the currency. This is especially true for enterprises that are engaged in import or export.
One of the reasons for the yuan deficit could be the impact of one or more major transactions in the market, “which led to a decrease in yuan funds in accounts in certain banks,” Natalia Vashchelyuk, an analyst at Sovcombank, admits in a conversation with Frank Media.
Another possible reason is the lifting of covid restrictions in China itself, the state banker told the publication. Such a decision, he said, could increase demand for yuan within the country.
On the eve of the Central Bank announced the entry into the foreign exchange market. From January 13, the Bank of Russia will start selling Chinese yuan from the National Welfare Fund on the Moscow Exchange in the interests of the Ministry of Finance. In January, the Ministry of Finance intends to sell yuan for 54.5 billion rubles.
The daily volume of transactions until February 6 will amount to 3.2 billion rubles. This is approximately 5-10% of the turnover of trading in the yuan-ruble pair with the settlements “tomorrow”, analysts of Promsvyazbank estimated.