Russia will start buying Chinese yuan for its international reserves as soon as this month, according to reports from Russian economists. While analysts say the purchases will be small and symbolic at first, they are supposed to show a turnaround in the country’s economy.
Russia buys the Chinese yuan for reserves
Russia will start buying Chinese yuan for the first time since invading Ukraine, according to reports from local economists. The move marks a departure from the sell-off that the Russian Federation began implementing at the beginning of 2023, lowering its numbers since February.
Buying this money in Chinese Yuan will help the country continue to build up its reserves, which were cut off due to the seizure of more than $300 billion in assets due to Western sanctions enacted as a result of Russia and Ukraine starting a conflict. About these purchases, Bloomberg economist Alexander Isakov advertiser:
The volumes of foreign exchange purchases will be small at first, but they are very symbolic because it will show that the country instead of eating through reserves is building them up.
However, other economists believe that yuan purchases will begin in June, such as Dmitry Polevoy, an economist at Locko-Invest in Moscow, who also stated that the purchases will be very small at first. This is seen as positive by some analysts, as it is seen as a good sign of stabilization of the Russian economy.
Natalia Melchakova, analyst at Freedom Holding Corp., said:
It will be important to the market if the country starts accumulating reserves again rather than spending them. This may positively affect the ruble.
Build reserves free of penalties
The report comes after the Governor of the Bank of Russia, Elvira Nabiullina, announced on April 21 that the bank focused on building a bank reserve consisting of non-sanctionable assets, but without specifying the nature of these assets. While the sanctions affected some of its trade structure, Russia has survived and thrived under these constraints, and has been able to build stash $80 billion in reserves held offshore, March reports.
This is thanks in part to the cooperation of allies such as China and India, as well as members of the BRICS bloc, who have absorbed Russia’s oil production. There are also reports that some of these countries act as proxies for Russian oil companies, buying large quantities of this sanctioned oil and ‘laundry– Shipped to countries that have cracked down on Russian oil imports.
What do you think of Russia buying the Chinese yuan to reserve foreign assets? Tell us in the comments section below.
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