It’s time to knit swaps – Newspaper Kommersant No. 64 (7509) dated 04/13/2023

Since the beginning of April, the volume of swap transactions with the euro has grown sharply, catching up with the dollar. Market participants note a high speculative interest in the European currency against the background of the depreciation of the dollar in the world. The deficit was also determined by the Easter holidays in Europe. However, the strategy to reduce the dependence of the Russian economy on the currencies of unfriendly countries will lead to an increase in the influence of the yuan in this segment.

On Wednesday, April 12, the euro exchange rate at the auctions of the Moscow Exchange exceeded the level of 90 rubles/€. During the trading session, the exchange rate of the European currency reached 90.44 rubles/€ on the Moscow Exchange, which is 86 kopecks higher than the closing values ​​on Tuesday. By the end of the day, it closed at 89.99 rubles/€, the highest closing value since April 5 last year. The dollar ended trading just below Tuesday’s closing level at 81.95 rubles/$, although it reached 82.59 rubles/$ during the day. The yuan exchange rate fell by 2 kopecks to 11.89 rubles/CNY.

In the segment of swap operations – transactions for the transfer of currency positions – the euro was ahead of the US dollar in terms of volume for most of Wednesday’s trading.

Only at the end of the day, the volume of one-day swaps with the euro slightly yielded to operations with the dollar: 102.4 billion rubles. against 103.9 billion rubles. At the same time, the volume of transactions with the yuan confidently ranked first – 282 billion rubles. The convergence of the indicators of transactions with the currencies of unfriendly countries was due both to a decrease in the volume of transactions with the dollar (in the first weeks of January, the trading volume was 200–300 billion rubles), and due to the growth of transactions with the euro. In the first quarter, the average daily volume with the European currency was about 50 billion rubles, and in April it overcame the level of 100 billion rubles.

According to Kommersant’s interlocutor, market participants have reduced long positions in dollars against the ruble and increased long positions in euro against the backdrop of a trend towards a general weakening of the dollar in the world market. According to Investing.com, on Wednesday, the DXY index (the dollar exchange rate against six major world currencies) fell by 0.8% to 101.45 points, which is more than 4% below the levels of early March.

Sovcombank chief analyst Natalya Vashchelyuk points out that the growth in demand for euro swaps occurred during periods in which there are fewer business days on European markets: on April 7 and 10, trading on European markets was limited due to the Easter holidays, and euro swap operations in Russia were not carried out. “The currency swap market has been showing a steady shortage of liquidity in euros since the beginning of April. Hence the high volumes,” says Mikhail Shulgin, head of the global research department at Otkritie Investments. In addition, according to him, in conditions of limited liquidity in dollars and euros, banks meet the need for currencies mainly through yuan. In particular, since January of this year, the Bank of Russia has been offering banks a daily currency swap with a limit of CNY 10 billion.

The decline in the use of dollar swaps leads to a decrease in the practice of using it in foreign trade operations, analysts say.

With the euro, according to the chief analyst of PSB Denis Popov, the situation is somewhat different, because the euro inflow into the country is maintained at the expense of the remaining energy exports to the EU. “Besides, recently there have been active reports about the closure of Russian projects in the EU and European ones in Russia, which should be accompanied by appropriate cash flows,” Mr. Popov notes. “Most likely, we are talking about importers who make purchases in the interests of the state, the so-called critical import, when a high price does not hold back demand. Perhaps this import, at the request of a foreign seller or intermediaries, should be paid in euros, ”a source on the foreign exchange market notes.

At the same time, market participants believe that interest in the euro will decrease in the near future, as the process of structural transformation of the Russian currency market, which consists in reducing the influence of currencies of unfriendly countries, will continue. “The yuan will displace both the dollar and the euro,” notes Denis Popov. At the same time, he does not expect a significant impact of other currencies on the structure of the foreign exchange market in the short term.

Vitaly Gaidaev