China Launches Swaps, Forwards with Russia in National Currencies
MOSCOW, December 29 (Sputnik) –According to the China Foreign Exchange Trade System (CFETS), the ruble has become the 11th currency in the yuans swaps trading.
On December 26, CFETS reported on its website that swaps and forwards trading between the yuan and national currencies of Russia, Malaysia and New Zealand would start on December 29.
Earlier in December, China's Minister of Commerce Gao Hucheng claimed that China could increase the usage of yuan in trade with Russia amid the ruble's depreciation.
"The fact that China will provide some opportunities [to Russia] to get a source of foreign currency liquidity will slow down panic [caused by the ruble depreciation] and bring the ruble closer to fundamental rates based on oil Brent price quotations and economic growth," analyst from Finam Holdings, company providing financial services, Timur Nigmatullin told Sputnik on Monday.
The Russian ruble plunged to a record low earlier in December amid a slump in oil prices and geopolitical tensions related to the Ukrainian crisis.
Trading in national currencies falls in line with China's intention to weaken the US dollar's dominance in global finance and promote the yuan as an alternative.
In October, the Bank of Russia and the People's Bank of China – the nations' central banks – reached a three-year agreement on currency swaps worth 150 billion yuan (over $2.4 billion).
Both the Russian and the Chinese leaders have repeatedly praised the decision, saying it would bring positive effects for the countries' economies and currencies.
The main benefits of mutual payments in national currencies are the absence of charges for the conversion of the currencies, direct payments and higher transparency in relations between the banks.
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Ditching US dollar: China, Russia launch financial tools in local currencies
Published time: December 29, 2014 14:03 , Russia Today
China and Russia have effectively switched to domestic currencies in trading using financial tools as swaps and forwards, as they seek to reduce the influence of the US dollar and foreign exchange risks.
The agreement signed in the end of October comes into force Monday, December 29, and provides a currency swap of CNY150 billion (up to US$25 billion).
READ MORE: Defying the dollar Russia & China agree currency swap worth over $20bn
The country’s Foreign Exchange Trade System will carry out similar transactions with the Malaysian ringgit and the New Zealand dollar.
From now on yuan swaps are available for 11 currencies on the foreign exchange market.
“China won’t stop yuan globalization or capital account opening because of the volatility in emerging market currencies,” Ju Wang, a senior currency strategist at HSBC Holdings Plc in Hong Kong told Bloomberg.
China has set up bilateral currency swap lines with more than 20 countries and regions since 2009, including Switzerland, Brazil, Hong Kong, Indonesia and South Korea, Xinhua News reported in July.
A swap is a financial tool to ease transactions by exchanging certain elements of a loan in one currency, like the principal or interest payments into an equivalent loan in another currency.
Currency forward is an obligation of two parties to convert an agreed amount of one currency into another by a certain date at an exchange rate specified at the moment of signing the deal.
Russia and China have long been looking for ways to cut the dollar’s role in international trade. The question is significant for China as 32 percent, or $4 trillion of its foreign exchange reserves are in US bonds, which means there is a vulnerability to fluctuations in the exchange rate.
Russia’s foreign exchange reserves are worth $398 billion, and the US dollar accounts for about $162.45 billion.
The country’s economic growth has slowed amid a standoff with Western countries over the Ukrainian conflict. After the country’s financial sector faced EU and US sanctions it became hard for Russian businesses to raise finance in the West.
Chinese authorities are particularly interested in currency swap lines with developing countries, mainly from the Asia-Pacific region. Australia, New Zealand, Brazil, Singapore, Hong Kong, Argentina, and Malaysia are actively involved in transactions with China.
จีนเริ่มช่วยรัสเซียทางด้านการเงินแล้ว
MOSCOW, December 29 (Sputnik) –According to the China Foreign Exchange Trade System (CFETS), the ruble has become the 11th currency in the yuans swaps trading.
On December 26, CFETS reported on its website that swaps and forwards trading between the yuan and national currencies of Russia, Malaysia and New Zealand would start on December 29.
Earlier in December, China's Minister of Commerce Gao Hucheng claimed that China could increase the usage of yuan in trade with Russia amid the ruble's depreciation.
"The fact that China will provide some opportunities [to Russia] to get a source of foreign currency liquidity will slow down panic [caused by the ruble depreciation] and bring the ruble closer to fundamental rates based on oil Brent price quotations and economic growth," analyst from Finam Holdings, company providing financial services, Timur Nigmatullin told Sputnik on Monday.
The Russian ruble plunged to a record low earlier in December amid a slump in oil prices and geopolitical tensions related to the Ukrainian crisis.
Trading in national currencies falls in line with China's intention to weaken the US dollar's dominance in global finance and promote the yuan as an alternative.
In October, the Bank of Russia and the People's Bank of China – the nations' central banks – reached a three-year agreement on currency swaps worth 150 billion yuan (over $2.4 billion).
Both the Russian and the Chinese leaders have repeatedly praised the decision, saying it would bring positive effects for the countries' economies and currencies.
The main benefits of mutual payments in national currencies are the absence of charges for the conversion of the currencies, direct payments and higher transparency in relations between the banks.
***
Ditching US dollar: China, Russia launch financial tools in local currencies
Published time: December 29, 2014 14:03 , Russia Today
China and Russia have effectively switched to domestic currencies in trading using financial tools as swaps and forwards, as they seek to reduce the influence of the US dollar and foreign exchange risks.
The agreement signed in the end of October comes into force Monday, December 29, and provides a currency swap of CNY150 billion (up to US$25 billion).
READ MORE: Defying the dollar Russia & China agree currency swap worth over $20bn
The country’s Foreign Exchange Trade System will carry out similar transactions with the Malaysian ringgit and the New Zealand dollar.
From now on yuan swaps are available for 11 currencies on the foreign exchange market.
“China won’t stop yuan globalization or capital account opening because of the volatility in emerging market currencies,” Ju Wang, a senior currency strategist at HSBC Holdings Plc in Hong Kong told Bloomberg.
China has set up bilateral currency swap lines with more than 20 countries and regions since 2009, including Switzerland, Brazil, Hong Kong, Indonesia and South Korea, Xinhua News reported in July.
A swap is a financial tool to ease transactions by exchanging certain elements of a loan in one currency, like the principal or interest payments into an equivalent loan in another currency.
Currency forward is an obligation of two parties to convert an agreed amount of one currency into another by a certain date at an exchange rate specified at the moment of signing the deal.
Russia and China have long been looking for ways to cut the dollar’s role in international trade. The question is significant for China as 32 percent, or $4 trillion of its foreign exchange reserves are in US bonds, which means there is a vulnerability to fluctuations in the exchange rate.
Russia’s foreign exchange reserves are worth $398 billion, and the US dollar accounts for about $162.45 billion.
The country’s economic growth has slowed amid a standoff with Western countries over the Ukrainian conflict. After the country’s financial sector faced EU and US sanctions it became hard for Russian businesses to raise finance in the West.
Chinese authorities are particularly interested in currency swap lines with developing countries, mainly from the Asia-Pacific region. Australia, New Zealand, Brazil, Singapore, Hong Kong, Argentina, and Malaysia are actively involved in transactions with China.