Russia Continues To Sell Yuan And Plans To Buy Them Again

Russia Continues To Sell Yuan And Plans To Buy Them Again

January 17, 2023 0 By Wiley McDermott

On Tuesday, the central bank of Russia made a statement about its recent activity pertaining to the Chinese yuan. According to the central body, they have sold a large number of Chinese yuan in the forex market.

$47 Million Worth of Yuan Sold by Russia

According to the latest updates from the central bank of Russia, they have sold the Chinese yuan in the forex market. It was on January 13 that $47 million worth of yuan from China was sold by Russia.

The central body has revealed that after selling the Chinese yuan in the forex market on January 13, they proceeded with the purchase of Russian roubles.

Russia has gone with this strategy to deal with the shortfall it has been facing in terms of its budget.

Shortfall Due to Gas and Oil Revenues

The European Union alongside the United States has been tightening sanctions against Russia since February 2022.

They are constantly increasing their aggression against Russia with sanctions and the country is trying its best to deal with the situation.

Russia has come up with its own solution to deal with the situation and it is selling the Chinese yuan to make it happen.

Due to the sanctions, Russia is not able to export oil and gas at the scale it used to do in the past. This is the reason why the country’s revenues from gas and oil have recorded a shortfall.

Thus, the country is selling the Chinese yuan to deal with the overall situation and keep the rouble’s value from losing its market worth.

Statement by the Russian Finance Ministry

The finance ministry of Russia released a statement on Wednesday where they revealed more plans pertaining to selling the Russian rouble.

The ministry revealed that they had planned that from January 13, they would start selling yuan that would be worth 3.2 billion roubles.

They had decided that they would do it every day and the activity would continue from February 6. The finance ministry spokesperson clarified that it was part of their budget rule so it was going to be a normal activity.

The budget rule of Russia suggests that if the revenues from gas and oil exports do not meet the target, then it would sell foreign currencies.

The entire purpose of selling foreign currencies in the market is to buy the Russian rouble against them. This way, they can come up with the roubles they need in order to allocate them to the budget.

With Russia, throwing the Chinese yuan into the market is the best way to stabilize and strengthen its rouble. Russia has a mutual understanding with China so they know what they are doing.

Both countries are to benefit from each other’s activities and make things right in order to compete with the US dollar.

They do not want to strengthen the dollar, which is why all of their activities are involving each other’s currencies.

Total Roubles the Finance Ministry aims to Sell

The finance ministry of Russia has made it clear that throughout the mentioned period, they want to sell yuan into the forex market that is worth 54.5 billion roubles.

This is going to bring their total amount somewhere close to $800 million. The roubles they generate from the sales of the yuan will be put towards the country’s upcoming budget.

The Russian budget is to come out somewhere toward the end of January. For now, the ministries are working on finalizing the budget before they come up with the final figures.

The country wants to move away from the western countries due to their constant hostility against their economy. Russia does not want to strengthen the USD, GBP, or EUR in the process.

Therefore, it has joined hands with China and wants to provide more strength to CNY in the forex market.