/ world today news/ The attention of the Central Bank of Russia turned to the yuan: it is actively traded, used for savings, and the sale of reserves supports the exchange rate of the ruble and softens the costs of sanctions. Protecting their own economy, other countries are also switching to payments in national currencies. Thus, China signed corresponding agreements with Japan, Brazil and Iran. And Moscow with Beijing and Delhi. Saudi Arabia is ready to accept payment for oil in any currency.
Interventions and swaps
Since the beginning of the year, the Central Bank of the Russian Federation has resumed currency operations on the domestic market. From February 7 to March 6, 160 billion rubles worth of yuan were sold. Interventions offset losses from oil price fluctuations and stabilize the ruble.
“This offsets the budget deficit, which depends on oil and gas revenues by 30-50%. The revenue shortfall is covered by the FNB and the issuance of federal loan bonds. Now there are difficulties with investors. There are no problems with the FNB,” says the member of The Supervisory Board of the Guild of Financial Analysts and Risk Managers Alexander Razuvaev.
In addition, the treasury will replenish the dividends of state-owned companies. The government has enough tools to support the ruble’s exchange rate. For example, it is still possible to issue OFZ for the population, to raise the basic rate, the expert notes.
Incomes and the ruble are falling because of the sanctions. Financial analyst Andrey Vernikov recalls that the authorities called the optimal level of 70-80 rubles per dollar. “Policy will be conducted in line with this corridor. A significant strengthening of the national currency will reduce the revenues in the budget, but too much weakening will stimulate inflation and bury the plans to reach the target of 4-5% next year”, he points out.
“In the summer, exports increased due to rising energy prices, and imports decreased due to sanctions – we got a good trade balance. The ruble became very strong. But with the recovery of imports, exports did not increase, and the national currency weakened. The exchange rate depends on market conditions,” he adds Razuvaev.
In terms of currency swaps – a temporary exchange, in this case with yuan – this is the traditional version of a loan. “To balance the jumps in revenues in the treasury, the national banks lend to each other. The interest on such loans is usually symbolic,” he explains.
The population converts savings into Chinese currency. Such is offered by Sberbank, VTB, Gazprombank and many others. However, the yuan also fluctuates a lot. According to Razuvayev, deposits in Arab dirhams and even Azerbaijani manats can be more attractive due to their greater stability.
Loss of trust
Financial expert Yulia Makusheva believes that the yuan is not yet able to replace the dollar. “For another ten years, the American currency will not yield. Most likely, the ruble will weaken to 80 against it,” she predicted.
Vernikov also believes that it will not be possible to quickly change the reserve currency, even though its role in international trade is declining. “This is a political issue. So far, the delicate balance suits everyone. But the world stopped measuring everything in dollars only. Its share in central banks will continue to decline. Until 2022, only Iran was subject to an asset freeze. But this country is not an easy partner for everyone. After they did the same with Russia, following all international rules, trust in the American currency is no longer so unconditional,” he emphasizes.
Half of the trade turnover between Moscow and Beijing is in yuan and rubles. In addition, according to China’s foreign ministry, oil and gas from the Gulf countries will also be paid in yuan. China and Saudi Arabia signed a comprehensive strategic partnership agreement. In December, India announced the transition to the national currency in trade payments with Russia. Mutual trade increased by 130% to $17 billion. By 2025, 30 billion are planned.
“In general, the prospect of payments in own currencies is quite realistic, this reduces risks and dependence on exchange rate fluctuations. Budget revenues, exporters’ revenues and the price of imported goods depend on changes in the value of the dollar,” says financial expert Elena Drozdova .
New money
But the ways to switch to the national currency are still being discussed. Makusheva believes that the future is electronic money. “It is important for us to lead this process. For example, this was the case with the euro – when it first appeared, it was worth nothing, and then it went up a lot. When many people switch to digital technologies, the virtual ruble will also see an increase” , argued the expert.
Other experts propose currency zones that unite several countries. For example, the single currency of Eurasia. “This is beneficial both for us and for friendly Eurasian countries. Especially for Turkey with its rather weak lira,” notes Razuvaev.
There is no doubt that the time has come for a multipolar financial system. Big unions like BRICS are interested in their own currency. This issue will be discussed at the summit in South Africa at the end of August. It is necessary to simplify mutual trade and achieve independence from the emissions of unfriendly countries.
Translation: V. Sergeev
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