The strengthening of the Russian currency did not last long: the yuan exchange rate, after falling by 11% at the beginning of the week and reaching an annual minimum, ended with a symbolic decrease of 1%, around 12 rubles/CNY. This was facilitated by the decision of the Russian government to soften the requirement for the mandatory sale of foreign currency earnings by the largest Russian exporters. On the over-the-counter market, where trading in “toxic” currencies has moved as a result of sanctions against the Moscow Exchange group, the dollar exchange rate is around 82 rubles/$. In general, experts note the gradual adaptation of the Russian foreign exchange market to new trading conditions, which is reflected in the smoothing of exchange rate fluctuations.
On Friday, June 21, the yuan exchange rate on the Moscow Exchange almost completely recovered from the fall at the beginning of the week. At the very beginning of exchange trading, the Chinese currency rate soared by 43 kopecks, to 12.38 rubles/CNY, close to the maximum of this month. But it was not possible to hold on to the achieved mark, and by the end of the day the rate was 12.05 rubles/CNY, only 10 kopecks below the closing value of the previous week.
The yuan has been rapidly depreciating throughout the outgoing week. On Monday, the Chinese currency rate fell by 20 kopecks (1.7%), on Tuesday – by another 50 kopecks (4.2%), and at the beginning of trading on Wednesday, the loss exceeded 60 kopecks (5.3%). As a result, the rate reached 10.84 rubles/CNY, a minimum since May 2023. However, on Thursday the yuan had already recovered most of its losses and approached 12 rubles/CNY.
The high volatility of rates was caused by a disruption in the usual course of foreign exchange trading, says Vladimir Evstifeev, head of the analytical department of Zenit Bank.
Last week, the Moscow Exchange group (including the National Clearing Center, NCC, which conducts settlements for transactions) came under American sanctions (see Kommersant of June 13), which led to the cancellation of exchange trading in the dollar and euro. The transfer of a significant volume of transactions in toxic currencies to the over-the-counter market could require importers who continue to deal with them time to find providers. “The transfer of foreign exchange trading to the interbank market is a big step back, since it greatly increases the costs of trading participants, reduces the transparency of transactions and can lead to inadequate price changes in the ruble exchange rate,” notes Alexander Potavin, an analyst at Finam Financial Group.
< p class="doc__text">Moreover, as the head of the client operations department in financial markets of Sovcombank, Philipp Agrachev, notes, importers have become more cautious in purchasing currency, even yuan, expecting new payment routing.
Low demand is indirectly indicated by the low trading volumes of Chinese currency in the first days after the new sanctions. On Monday, yuan trading volume in the tomorrow trading mode was only RUB 78 billion, on Tuesday it rose to RUB 122 billion, but even this figure was below the average for this year. In the following days, as importers built up payment chains and solved technical problems for other market participants, trading volumes also recovered.
Pressure on the ruble exchange rate on Friday was exerted by the government’s decision to soften the requirements for mandatory sales foreign exchange earnings by Russian exporters. Now it is necessary to credit not 80%, but only 60% of the received currency funds to special accounts.
The 80% mandatory sale threshold was introduced in October last year and was intended to reduce the dollar exchange rate, which exceeded the level of 100 rubles/$. However, in the past week, due to a reduction in demand for currencies from importers, the dollar exchange rate dropped to 82 rubles/$, which is significantly lower than the level budgeted for (90 rubles/$).
According to Philip Agrachev, the recovery of world currency rates and trading volumes could be facilitated by the expiration of futures contracts for currencies on the Moscow Exchange. For the non-tradable dollar, the fixing was replaced by the Central Bank rate, which was determined on the basis of transactions made a day earlier, on Wednesday. “The yuan is being traded on the stock exchange, so the fixing was determined on Thursday,” notes Philip Agrachev.
However, the measures taken, according to market participants, may not be enough to return the exchange rate ruble to more budget-friendly levels. Moreover, it will take time to adapt imports and domestic demand to new non-market conditions, while foreign currency from exporters, albeit in a reduced volume, will enter the market. A similar picture was observed in the second quarter of 2022, when, due to the imbalance between supply and demand, the dollar exchange rate more than doubled in less than four months, to 50 rubles/$. “Given the continued strong position of the ruble, the demand for currency is unlikely to increase,” notes Vladimir Evstifeev. Therefore, he does not exclude the possibility that if the market reacts weakly to the government’s decision, an even greater reduction in the requirements for the mandatory sale of currency, as well as a suspension of the sale of yuan by the Central Bank, may follow.
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