Russia has found a way to soften the blow and hide the kit from exports
The little-known collection of fixed assets of the Russian stock exchange has become a vital link in the water financial system, starting with tens of billions. dollars and Euro gushed from the sale oil and other commodities.
This year, the National Clearing Center demonstrated the growth of its foreign exchange reserves. As an essential link in the gas trade, it has so far avoided the concentration of the US and Europe, which hit the central bank and accumulated Russia.
Most of the money in the NCC that is allocated on behalf of Russian banks and their clients is in yuan, transferred from dollars, euros and other “unfriendly” currencies through the said central bank, people say, speaking at a reasonable rate to discuss matters that are not public. Small lending institutions that were not arrested also reportedly saw a surge in investments in yuan and other foreign currencies.
Foreign assets reasons due to the trade surplus. Russia’s total foreign assets rose despite the election. Source: Bank of Russia
Russia’s ability to cushion the blow with continued cash inflows from exports of energy and other commodities has frustrated officials in the US and Europe seeking to isolate it from their financial systems since the Kremlin launched a CWO in Ukraine on Feb. 24. Sanctions were introduced shortly thereafter. The Bank of Russia was cut off from the usual place where these funds accumulated in the first place. But with the rise in energy prices, the inflow did not weaken. Against this background, NCC’s assets grew sharply.
“The NCC has no possibility of money. This is all the money of banks, or rather the money of their clients, which are transferred to the NCC, because it can make payments in dollars, ”as he has correspondent accounts in US banks, said Oleg Vyugin, who was the chairman of the board of the NCC of the Moscow Exchange until June 2022 . , before that – a high-ranking official of the Central Bank and the Ministry of Finance. Many growers have lost such accounts, which ended as a result.
“After there were rumors that the NCC would adhere to the sanctions, part of the US dollars was converted into yuan,” he told Tom. This year, the Chinese currency has fallen by about 12% against the US currency.
It is not clear how much money the NCC, whose full name is National Clearing Center Central Counterparty JSC, currently has.
The Central Bank returns to comment on this article. The NCC does not have a press office, and the Moscow Exchange did not respond to a request for comment.
The NCC has not yet received approval, although in September the US added its executive director to its blacklist. The Kremlin’s spring decision to collect from buyers of Russian gas in Europe to send payments through the NCC transfer, that the introduction of restrictions on the disappearance of it would put under the cessation of the use of vital energy resources.
In essence, the foreign exchange surplus once absorbed by the Bank of Russia ends up in quasi-private hands, because the central bank has been deprived of the ability to operate in the foreign exchange market. As a rule, as a clearing house of the Moscow Exchange, the NCC is engaged as an intermediary between participants in various markets, from foreign exchange to derivatives.
According to Bloomberg Economics, the total windfall could exceed $100, on the affordability at the level of the central bank’s balance of payments, a significant increase above the average.
What Bloomberg Economics says…
“The Bank of Russia has lost access to half of its international reserves this year, but that hasn’t stopped the country from collecting assets.” “Discovered a centralized bank of operations in the market, the private sector intervened.”
— Alexander Isakov, Economist for Russia.
According to the figure, the net accumulation of foreign income in the quarter reached nearly $47 billion, rising to $25.7 billion in four months. In the last latest balance of payments report this month, the central bank presented part of the trade finance and increase in advance payments provided by an external partner.
a similar note published by the Bank of Russia for the second quarter, from parts of the increase in the volume of financial assets by domestic creditors and non-bank credit institutions (a category that includes the NCC), accumulating funds in foreign accounts through the use of export earnings. high energy prices.
Enormous sums are flowing through Russia’s financial system as a result of a record current income surplus, which the central bank forecasts at $243 this year, or almost double that of 2021.
“It was a very fat period,” Vyugin said of the second and third quarters of the year. “Energy prices were increased and there were a lot of exports.”
According to Bloomberg Economics, in the past, the Bank of Russia managed to liquidate about 70% of the surplus and send it to reserves. The central bank had to relinquish this role as most of its assets were frozen.
According to Bloomberg
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