Russian companies lack yuan – Kommersant

Since the beginning of May, the cost of swaps with the yuan has risen sharply, fixing above the level of 6% per annum. Market participants note a high demand for Chinese currency from importers, which is not covered by the supply of exporters and the Ministry of Finance. The yuan deficit may intensify in the second half of the year when the Ministry of Finance switches from selling yuan to buying, as well as in the event of a reduction in yuan liquidity from banks.

For the third day in a row, the one-day swap rate in the yuan exceeds the level of 6% per annum, returning to the maximum values ​​of this year. According to the Moscow Exchange, on May 18, the indicative rate calculated at 12:30 p.m. on the top 20 prices of non-address buy and sell orders amounted to 6.18% per annum, which is six basis points (b.p.) higher than the previous day. The last time rates were so high was two months ago. Since the beginning of May, the indicator has grown by more than 120 bps. P.

An increase in the rate on yuan swaps may indicate an increase in the deficit of the Chinese currency in the Russian market. “Traditionally, after the May holidays, importers become more active, which increases interest in foreign currency in the framework of foreign economic activity,” says Vladimir Evstifeev, head of the analytical department of Zenit Bank. And not always for these purposes can be used in cash.

According to Mr. Yevstifeev, in case of cash gaps, importers can resort to swaps for short-term transactions, rather than buying yuan at exchange auctions. At the same time, the daily volume of swap transactions with the yuan on the Moscow Exchange is 250-300 billion rubles, almost twice the volume of swap transactions with the dollar and the euro.

The process of structural transformation of the Russian economy and the complication of cross-border settlements form the prerequisites for the emergence of a local deficit of a particular foreign currency, said Denis Popov, chief analyst at PSB. The main trend of the last year has been an active transition in foreign economic activity to the currencies of friendly countries and, first of all, the yuan.

According to the Bank of Russia, for 12 months since March last year, Russian exporters increased the volume of monthly transactions in Chinese yuan from $0.5 billion to $6.9 billion. The demand for foreign currency from importers increased 5.5 times, to $7.7 billion. According to the General Administration of Customs of the People’s Republic of China, in the first quarter of 2023, imports from Russia grew by a third (to $29.8 billion) year-on-year, while exports to Russia increased almost 1.5 times (to $24.1 billion).

Under the current conditions, according to Yury Tulinov, senior vice president of the market research and strategy office of Rosbank, apart from the operations of the Ministry of Finance (within the framework of the budget rule), there is essentially nowhere to get new yuan liquidity. At the same time, such sales have been systematically declining for the third month in a row. Since May 10, in the interests of the Ministry of Finance, the Central Bank has almost halved the sale of yuan to the equivalent of 2 billion rubles. daily, while in March such sales were carried out in the amount of 5.4 billion rubles. Denis Popov admits that in the second half of the year, as part of the budget rule, the Central Bank will start buying yuan. “The volume of such transactions is unlikely to be significant and significant for the formation of the ruble exchange rate,” he notes.

However, coupled with growing demand for foreign currency from importers, the yuan deficit could widen, especially since banks do not have much liquid yuan assets left. According to Yury Tulinov, the balances on nostro accounts in non-resident banks are at a very modest level of $10 billion. And these assets have not been growing in recent months (in autumn last year they exceeded $30 billion). “So Russian banks will run into a deficit of yuan every now and then until the balance of export-import flows in foreign currency becomes stable,” notes Mr. Tulinov. Before that, banks will actively use swap operations with the Central Bank to cover the deficit.

Vitaly Gaidaev