Key Takeaways:
Major Russian banks urge central bank action to counter yuan liquidity deficit
Rouble tumbles to lowest level against yuan since April
Central bank’s daily yuan sales set to plunge to $200 million
Chinese banks in Russia avoid currency trading due to fear of secondary Western sanctions
Russia and China discussing joint system for bilateral payments
Establishing clearing mechanism for payments in national currencies should not be a problem
Time-sensitive issue as trade between Russia and China increases
Russian banks facing shortage of Chinese yuan
Urging the central bank to take action
Some banks have suspended yuan operations due to the shortage- Stressed importance of having adequate yuan reserves for international trades
Russian lenders warn that yuan reserves are low- Urgent calls for Russian borrowers to repay in rubles
- Impacting the ability to conduct transactions with Chinese partners
- Concerns rise about the stability of the yuan in international transactions
Russia Faces Chinese Yuan Shortage in Banking Sector
Major Russian banks have recently raised concerns about a shortage of Chinese yuan liquidity in the banking sector, urging the central bank to intervene promptly. The rouble has tumbled to its lowest level against the yuan since April, impacting the ability of Russian lenders to conduct transactions with Chinese partners.
One of the reasons behind the shortage is Chinese banks in Russia avoiding currency trading due to fear of potential secondary Western sanctions. This has led to some banks suspending yuan operations, creating a time-sensitive issue as trade between Russia and China continues to increase.
To address this challenge, discussions are underway between Russia and China to establish a joint system for bilateral payments, with the hope that establishing a clearing mechanism for payments in national currencies should alleviate the liquidity deficit.
Russian lenders have emphasized the importance of maintaining adequate yuan reserves for international trades, while also warning that current reserves are low. Urgent calls for Russian borrowers to repay in rubles have been made, as concerns about the stability of the yuan in international transactions rise.
The central bank’s daily yuan sales are expected to plunge to $200 million, further highlighting the need for immediate action to counter the liquidity deficit in the banking sector.