A good pair

­Yesterday, the Moscow Interbank Currency Exchange held its first ruble-yuan trading. The launch of direct trading will reduce the costs of doing business, and thus the cost of the Chinese goods, say experts.

The Russian foreign exchange became the first platform to trade the yuan outside of Chinese territory. The exchange rate was 46.3345 rubles to 10 yuan. In one hour of trading – which will take place daily between 10:00 a.m. and 11:00 p.m. – 29 transactions were held in the total volume of 4.9 million yuan, or about 22.8 million rubles.  

“Super! The trade volume had exceeded our expectations,” Igor Marich, vice president of MICEX, commented on the results at the end of trading. Earlier, the expected trade volume was 3 million yuan. Chinese Ambassador to Russia, Li Hui, has called the launch of trading this year’s biggest economic event in the development of trade and economic relations and expressed hope that this event will accelerate the rate of internationalization of the Chinese and Russian currencies. 

In order to participate in the trade, almost 60 banks in Moscow, St. Petersburg and the Far Eastern and Siberian Federal Districts have opened foreign currency exchange accounts, MICEX representative told Rossiyskaya Gazeta (RG). With time, the geography of the participating banks will be expanded, argues RG’s interlocutor. For now, however, the volume of trade is not very impressive, adds financial analyst Sergey Suverov: the daily volume of trade between the ruble and the dollar equals almost $5 billion. But, a good start is evidenced by the interest, agrees the expert.  

Recall that the Russian and Chinese partners continue to mainly use the dollar in their transactions. This, in turn, leads to higher costs, associated with the transfer of money from one to another currency as well as the foreign exchange risk insurance. Using the yuan in purchases allows Russian importers to save approximately between 3 and 5 per cent of the transaction’s contract value, estimates a representative of one of the companies. According to him, in 2011 the company will be able to use the yuan in 10-15 per cent of all its purchases from China, and in the near future, this volume could be increased to 30 percent.

Russia and China have agreed on the need to organize the yuan-ruble exchange in the spring of this year. In China, the first yuan-ruble trading took place in October at the Shanghai Stock Exchange. Incidentally, the traded volume was almost five times lower than on the Russian platform. In November, during a meeting of the heads of the government of the two states, a protocol was signed allowing the use of national currencies in the trade between Russia and China. Prior to that, the ruble and the yuan could be used in at-the-border trading.

Considering the size of the trade volume, the effect will be substantial. China accounts for about 9.5 per cent of Russia’s foreign trade. In the last three quarters, the trade volume between the two countries amounted to $42 billion. Moreover, with such a high trade volume, it is dangerous to solely rely on the dollar due to the volatility of the currency market, says financial analyst Sergey Suverov.  

The Chinese authorities, he says, have already announced the intention to, with time, turn the yuan into a global reserve currency. Bringing the yuan onto the foreign currency exchange – is one of the steps in that direction, though a long road lies ahead. Russian investors could also benefit from the launch of trading.   

If the rate of the yuan against the ruble is determined by the market, banks will be more willing to open deposits in the Chinese currency, says Suverov. Considering the stability of the yuan and its, albeit slowly rising exchange rate, such deposits may be quite attractive.  

Experts say that the Chinese partners could pay in rubles for Russia’s seafood, timber and coal. At the same time, it’s hardly possible to transfer the exchange goods, the price of which is determined by the global markets –and which mainly include energy – to this form of payment in the near future. However, there are also objective difficulties in expansion of transactions in the national currency.

The main problem is partial convertibility of the yuan and the high volatility rate of the ruble. If a foreign currency can be freely traded for the yuan, then a reversed transaction will be limited. 

Therefore, even many of the Chinese experts are saying that, despite the sharp fluctuations of the currency rate, the ruble is more desirable in the settlement of foreign transactions.

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