In July, foreign currency deposits of corporate clients in banks exceeded 10 trillion rubles.

In July, foreign currency deposits of corporate clients in banks for the first time since March last year exceeded 10 trillion rubles in ruble terms. After four months of falling, they turned to growth in dollar terms for the first time. Market participants explain the situation by the active transfer of company accounts in yuan, the growth of settlements in Chinese currency and its rise in price against the dollar.

According to the Bank of Russia, deposits of legal entities in foreign currency increased noticeably in July, exceeding the bar of 10 trillion rubles for the first time since March 2022. ($109.74 billion). At the end of June, foreign currency deposits in terms of US dollars amounted to $106.62 billion. Thus, over the month, the indicator increased by $3 billion. Until July, in dollar terms, foreign currency deposits of corporate clients of banks decreased for four consecutive months from February, when they exceeded $118 billion.

According to Mikhail Matovnikov, head of the financial analytics center at Sberbank, the growth in foreign currency deposits is primarily due to the conversion of accounts in unfriendly currencies into yuan. In July, the expert believes, the process was accelerated by the weakening of the ruble.

Natalya Vashchelyuk, chief analyst at Sovcombank, adds that, according to the Central Bank, the share of funds in “non-toxic” currencies is steadily growing: in March 2022 it was 1%, at the end of December 2022 – 24%, and at the end of June 2023 – 43% . “The amount of funds in “non-toxic” currencies increases with a decrease in the total amount of funds placed by companies in banks in foreign currency,” said Ms. Vashchelyuk. According to her, in dollar terms, as of July 1, the funds of companies in banks in “non-toxic” currencies amounted to $49 billion, an increase of $37 billion over the year.

“The increase in the volume of funds in “non-toxic” currencies is due to the fact that their share is increasing in payments for exports – in the first half of the year, the volume of payments in yuan for exports amounted to $42 billion, in the second half of 2022 it was only $34 billion,” notes Natalia Vashchelyuk. At the same time, according to her, the volume of dollars and euros received from settlements for exports decreased from $134 billion in the second half of 2022 to $79 billion in the first half of 2023. “Companies are afraid to hold funds in “toxic” currencies, so they use the currencies of friendly countries (primarily the yuan) to protect against the risks of a weakening ruble,” the expert explains. “Most likely, the trend will continue in the coming months.”

Deputy Chairman of the Board of Realist Bank Andrey Kazakov notes that foreign currency deposits of corporate clients may grow in rubles, including due to changes in the yuan exchange rate against the ruble, since the ruble weakens against the yuan more than against the US dollar. “Over the past six to eight months, there have been almost no new corporate deposits in US dollars – banks are reluctant to bear risks and save US dollars on their correspondent accounts in foreign banks,” Mr. Kazakov explains.

The interlocutor of Kommersant in a large Russian bank adds that currency changes occur within banks and do not affect the market: “The main reason for the growth of foreign currency deposits of legal entities was the conversion of their dollar accounts into yuan accounts, but this happens exclusively within the bank’s balance sheet, without access to stock exchange and the real movement of currency on correspondent accounts.

As Igor Dubov, a partner at the Iontsev, Lyakhovsky and Partners Bar Association, explained to Kommersant, even in sanctioned banks, clients can convert an unfriendly currency into a friendly one if the sale of dollars and the purchase of yuan is carried out within the bank and the correspondent account in dollars is not involved.

The head of the Association of Participants in the Market of Electronic Money and Money Transfers (AED), Viktor Dostov, specified that there are many reasons for fluctuations in the structure of the monetary mass of legal entities. “The first is the desire to insure against sharp fluctuations of the ruble in accounts or deposits in yuan, the second is that many people still pay or receive money from abroad, in the same yuan, of course, without any special need, they keep money in them,”— the expert explained.

According to Mr. Dostov, a number of dollar-denominated assets are being transformed into yuan, since it is much more difficult to pay with American currency, and the transformation mechanisms depend on the bank – directly, through the client’s broker, or more complex methods are devised. It is possible, the expert adds, that part of the transactions in the sanctioned banks also go through cash.

Maxim Buylov