Russia mulls buying $70bn in yuan, other ‘friendly’ FX to stem ruble's surge
Russia is reportedly weighing a plan to buy up to $70 billion in the Chinese yuan and other "friendly" currencies this year to stem the ruble's sharp surge amid Western sanctions against Moscow over its military operation in Ukraine | The ambitious plan gained initial support at a special “strategic” planning meeting of the top Russian government and central bank officials on August 30, according to Bloomberg, citing people familiar with the deliberations. ● The move comes after the Kremlin’s years-long policy of containing spending and saving hundreds of billions in dollars, euros, and other foreign currencies as a cushion to insulate the Russian economy from the shocks of oil prices.
💬 “In the new situation, accumulating liquid foreign exchange reserves for future crises is extremely difficult and not expedient," the report stated. “The frozen $300 billion were of no help to Russia; on the contrary, they became vulnerability and a symbol of missed opportunities,” the report said, adding that saving that money “is a direct reduction of investments in Russia in favor of investments in other countries.”
Bloomberg said in the short term, with earnings from exports of oil and gas flooding in and driving the current account surplus to a record this year and pushing the ruble higher, the proposal calls for spending 4.4 trillion rubles ($70 billion) to buy the currencies of “friendly” countries, mostly yuan. ● Before the start of the Russian military operation in Ukraine in late February, Moscow had steadily increased its yuan investments as part of its diversification campaign, becoming one of the largest holders of reserves in the Chinese currency in the world.