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Russian business lobby calls for c. bank to accelerate yuan reserves

Published 09/30/2022, 11:26 AM
Updated 09/30/2022, 11:31 AM
© Reuters. Banknotes of Chinese yuan and Russian rouble are seen amid flags of China and Russia in this illustration picture taken September 15, 2022. REUTERS/Florence Lo/Illustration
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MOSCOW (Reuters) - Russia's top business lobby called on Friday for the central bank to build up its reserves of the Chinese yuan in a bid to stabilise the rouble, which is susceptible to wild bouts of volatility and has been trading near multi-year highs.

The Russian Union of Industrialists and Entrepreneurs (RSPP) said Russia needed to step up its purchases of the yuan and currencies from other "friendly countries" to help "stabilise" the value of the Russian currency.

The rouble has surged under Moscow's strict capital controls and a slump in imports. Russian businesses say a strong currency dents their competitiveness and the government favours an exchange rate of 70-80 against the dollar.

On Friday, the rouble was trading in a very wide range from 53.20-58.35 against the greenback.

The RSPP said Russia's Finance Ministry should issue yuan-denominated bonds which can then be bought by both the central bank and private investors. Selling roubles to buy foreign currencies should weaken the value of the Russian currency by increasing its supply on forex markets.

Before being hit with unprecedented sanctions, which froze around half of the central bank's international reserves, Russia used to buy tens of billions of dollars worth of foreign currencies and gold every year.

Moscow has since accelerated a campaign to reduce the role of the dollar, euro and other Western currencies in its financial system.

Moscow Exchange, Russia's largest stock market, said earlier this week it expects trading volumes in the rouble-yuan pair on its platform will surpass dollar-rouble deals next year.

© Reuters. Banknotes of Chinese yuan and Russian rouble are seen amid flags of China and Russia in this illustration picture taken September 15, 2022. REUTERS/Florence Lo/Illustration

In a letter to the finance ministry and central bank, the RSPP also called for the country to "intensify its efforts ... to provide financial institutions of friendly countries access to Russia's exchange infrastructure."

Russia has locked out banks and investors from most foreign markets since February. Moscow considers "friendly" countries those which have not imposed sanctions on Russia since it launched military actions in Ukraine.

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