Bloomberg News Markets reported May 31 that the monthly volume of exchange between the Chinese yuan and the Russian ruble has increased by almost 1,100% (12 times) since February to $4 billion/month. This alone is further increasing the weight of the yuan or renminbi in central banks’ reserves, beyond the IMF’s recent official upgrade of its role in international exchange, roughly from 2% to 5%. Bloomberg calls it “a sign Russians are increasingly turning to Chinese goods to replace stalled Western imports.” It quotes Sberbank analyst Yuri Popov, “The main players in the yuan-ruble market are corporations and banks, but there is also a growing interest from retail investors.” In other words, Russian institutions and individuals are buying yuan with rubles on a large scale. This is even as the EU has just added Sberbank—the biggest deposit bank for Russians’ savings by far—to the SWIFT exclusion, making sure that Russians will have great difficulty and less and less reason to spend rubles for dollars or euros.
The Bank of Russia central bank issued its Financial Stability Review today in which it forecast that the dollar and euro would decline as international currencies; more to the point, announced that it would likely set negative interest rates for dollar and euro deposits in Russia, which would cause Russia’s private banks to do the same (i.e., pay no interest and charge a fee for depositing these currencies in Russian banks).
