/ world today news/ According to the Central Bank of Russia, the population has 105.4 billion dollars in foreign currency accounts – an absolute record. At the same time, the yuan is in the top three for deposits, 17% of people trust it. Why is there such a demand for the Chinese currency and is it right to transfer savings to it?.
Pocket move
By early February, Russians held 7.3 trillion rubles in foreign currency, the most since 2018, when they began publishing such information.
And this is despite all the limitations. But potentially “toxic” investments were clearly moved “under the mattress” – just in case.
The most sought-after asset in the country is still the ruble, 34.9%. The dollar has 28.3%. But the yuan is in third place – 17.4%. The euro fell to eight percent.
Growing relationships
Experts say that Russians are traditionally quite conservative and prefer the ruble. As for the dollar and the euro, their positions are supported by the strict restrictions on exports abroad. And although now there is no trust in “unfriendly” currencies, the risks of weakening the ruble force us to insure ourselves.
The popularity of the Chinese currency is a direct consequence of the strengthening of relations between Moscow and Beijing, in particular the expansion of bilateral trade in national currencies. The central bank is also setting an example for the people: it transferred part of its international reserves to yuan, getting rid of excess dollars and euros.
“The interest on deposits in yuan is about two percent, which, of course, does not allow us to consider this instrument profitable, but it is quite suitable for accumulating savings. The Chinese currency has been strengthening against the Russian one for ten years and only in 2022. sank in. This year, in connection with the lifting of anti-pandemic restrictions and the recovery of the Chinese economy, the previous trend is expected to recover,” says Irina Pikhtina, vice president of RosDorBank.
“Mattress” or bill
According to Sergey Tsyplakov, a professor at the Faculty of World Economy and International Relations of the Higher School of Economics, cash yuan will be useful mainly for those who regularly travel to Hong Kong or Macau. In China itself, most payments are made through electronic mobile systems. In other countries, not all banks accept and convert Chinese currency.
However, Russians are actively opening deposits in yuan. And in February, several leading banks simultaneously raised interest rates on such deposits by 0.5-1%.
The specifics of the yuan
When choosing the currency of developing countries to save, it should be borne in mind that it is quite volatile and not freely convertible, there are risks of devaluation.
The yuan is officially defined as a “managed float based on a basket of currencies”. In practice, it is highly dependent on the dollar index. If he grows, the “Chinese” usually falls.
In fact, everything is decided by the People’s Bank of China, which creates additional risks.
“At any moment, the PBOC can raise the yuan against the ruble or sharply depreciate it. Moreover, the second option is even more likely, as it is important for China to maintain export competitiveness to stimulate economic growth. And also the strong national currency does not contribute to this,” warns analyst Nataliya Milchakova.
A RMB deposit makes sense if the bank doesn’t charge a fee for it. Otherwise, the yield on deposits is lower than the 2-3% nominally set by the banks, since everything is processed by converting funds into rubles.
Thus, it is still difficult to call the yuan a safe haven. Analysts recommend keeping no more than 20% of your savings in it.
Chinese loans
The Chinese currency was also appreciated by Russian companies. In February, the volume of repo transactions in yuan in the interbank market, according to the Central Bank, reached 28.5 billion. This is also a record.
Now, more than 20 bond issues worth 70 billion yuan are traded on the Moscow Stock Exchange.
The fact is that access to a loan resource in dollars or euros is difficult due to sanctions. In addition, many do business with Beijing, mostly importers. Yuan funds are also used for investment if the equipment or services needed to implement the project are Chinese.
In addition, when issuing bonds in yuan on the Russian market, the so-called offshore yuan is used, that is, circulating outside the PRC, Tsiplakov specifies. Unlike the territorial one, the NBK cannot directly control its exchange rate.
Translation: V. Sergeev
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