Russia supplies petroyuan
The ruble continues to grow against the dollar and the euro – on January 13, the current exchange rate of the world currency falls by 1.24 rubles, to 67.78 rubles, and Europe by 1.35 rubles, to 72.79 rubles. At the same time, in the Banks of Russia recently, it costs 10.0016 rubles, which is 0.14 rubles less than the day before. As for currency trading on the Moscow Exchange, on Thursday the dollar exchange rate there fell below 68 rubles; The yuan is below 10 rubles for the first time since January 3, 2023.
Supporting the ruble provides an opportunity to resolve the Bank of Russia after a year-long break in this foreign exchange market operation, this time almost in yuan. We are talking about interventions under the fiscal rule, which relate to revenues from the sale of oil and gas. Experts interviewed TASSit is predicted that against this background, the ruble may strengthen to 65-67 rubles per dollar by the end of January, and in the future, the sale of the currency will continue from the rapid weakening of the ruble, but will not stop the return of the exchange rate to levels above 70 rubles per dollar.
What is changing in the policy of the Central Bank
In accordance with the budget rules, the department of Elvira Nabiullina, on behalf of the Ministry of Finance, investment trade in yuan from the National Welfare Fund (NWF) due to the projected shortfall in oil and gas revenues.
The budget rule is a mechanism for redistributing the income that the Russian Federation receives from fruit exports in order to increase the commodity price conjuncture for the country’s exports. When planning the state budget, the decision is the so-called “cut-off price”. When the value of oil produced for export turns out to be higher, then additional installations are sent to the “eggshell”, which can be spent if prices fall. For almost the entire 2022, the budget rule was suspended in the part that concerned foreign exchange transactions, and the excess budget revenues from oil and gas taxes were directed directly to current government spending.
Operations for the sale and purchase of foreign currency in the foreign exchange market as part of the implementation of the mechanism of the budget rule by the Ministry of Finance are resumed from January 13. The main difference is that now they will be owned with yuan, and not with “toxic” Western currencies. As soon as they are received by the Central Bank, transactions are carried out in the currency section of the Moscow Exchange in the instrument “Chinese yuan – ruble” with a settlement term “tomorrow”. The Central Bank will be quick during each trading day of the month or the sale of foreign currency on the investment market to minimize the analysis of transactions on the dynamics of the exchange rate.
Why yuan?
On the reasons for choosing a currency for buying and selling liquid assets within the framework of the budget rule at the end of December, journalists chose the Minister of Finance of the Russian Federation Anton Siluanov. According to him, “the yuan from friendly currency countries is the most subject to reserve currency restrictions and sufficient liquidity in our external foreign exchange market.”
The Ministry of Finance noted that these actions of derivatives “affect the stable and predictable structural economic conditions, as well as specific studies of the volatile energy market for the Russian conference and secondary finance.”
As of December 1, the NWF held 309.7 billion yuan, while the Ministry of Finance predicted that the share of reserves in significant currency due to the consumption of investments in euros, pounds and carbon could double to 60 percent.
How did the Chinese economy present itself?
Chinese President Xi Jinping said in his new government that China’s GDP by the end of 2022 will exceed 120 trillion yuan (about $17.4 trillion). “Our country continues to explore its status as the world’s second largest economy with sustainable economic development,” he stressed.
The currency valuation level in the transfer of cross-border trade increased by about 37% last year, to 7.92 trillion yuan (about $1.17 trillion). “In the current situation, there is great potential to increase the share of yuan contracts, both in the investment field and in economic transactions,” said Shu Jueting, a spokesman for the Chinese Ministry of Commerce.
In the coming year, the PRC authorities intend to stimulate measures to expand the use of the yuan in international trade and the implementation of foreign economic projects. The country’s government requires the country’s financial institutions to intensify mutual settlements with other states in the currency of China.
In 2022, the official yuan against the dollar first fell by about 12%, then updated in October and several lows since 2008, but began to grow. At the end of 2022, the fall against the dollar was about 9.2%. However, since December 30 last year, the exchange rate is projected to curb the growth of tension. Last Tuesday, the dollar was worth 6.7611 yuan (the new highest value since August 15 last year).
This forecast includes the main reasons; by the beginning of January, China’s active foreign exchange reserves showed the highest figures for six months – $ 3,128 trillion ($ 11 billion more than last month).
The West saw the birth of the “petroyuan”
In early January, a British newspaper Financial Times (FT), citing experience, said that China’s willingness to move to buying oil in the Persian Gulf in yuan is linked to “the formation of a new international energy order.” Zoltan Pozhar, an analyst at the Swiss bank Credit Suisse, marked the “birth of the petroyuan” (petroyuan).
According to Pozhar, “China wants to rewrite the global rules of the energy market” in the context of a strategy to reduce trade in dollars, which is also expected by Chinese partners in the BRICS and a number of state states, which could lead to the reproduction of fragments in world trade.
The expert noted that due to the high national currency as a payment for French payments for energy raw materials, it looks even more significant, a noticeable fact that countries with excessive oil reserves (Russia, Iran, Venezuela, the GCC, Indonesia and the state in the north and west) its political and economic views are closer precisely to the PRC, oriented towards the United States.
Mikhail Makarov