Does the yuan threaten the ruble in foreign trade? -

Does the yuan threaten the ruble in foreign trade?

How does the Chinese yuan affect the Russian ruble?

Does the yuan threaten the ruble in foreign trade?

Of great importance for the development of the country's economy is the stability and demand for the national currency in the international market. Therefore, the Russian Federation for decades has been trying to strengthen the position of the ruble.
Statistics show that in 2019, the base world currencies strengthened their positions in international trade in the Russian Federation. Domestic imports are mainly sold for US dollars and Euros, and exporters often prefer the ruble. According to the Ved-Stat.Com Analytical Group, 4,711 Russian companies use the yuan to trade with China. Their numbers came close to firms using the ruble in international settlements. Therefore, with an increase in the commodity circulation of these enterprises, it is quite possible that there will be a tendency to displace the Russian currency from mutual settlements with the PRC.

Features of trade with China
Analysts say that China remains a leading partner in conducting foreign trade with Russia. On the one hand, this is ensured by the export of raw materials from Russia. On the other hand, by importing from China a wide range of goods, the structure and dynamics of which can be analyzed in detail here. But the sale of goods for rubles is lagging behind, as large Russian corporations prefer settlements in world reserve currencies (USD and EUR), referring to the terms of the contracts. Therefore, the share of the renminbi in Russia's foreign trade is only 1.15%.

At the government level, agreements are concluded to stimulate settlements between domestic and Chinese counterparties in national currencies. Commercial banks on both sides of the border are expanding their use of direct correspondent accounts. In Russia, payments are being mastered through the CIPS system (an analogue of SWIFT) in RMB.
Such aggressive stimulation leads to the refusal of importers to use the national currency, giving preference to Chinese.
So far, this trend is not critical, since the difference in value is more than 10 times, but the exchange of goods for importers using the yuan can change dramatically. In this case, companies will massively use the Chinese currency, more stable and predictable. This gradual transition can be seen already in 2019. The Russian ruble lost almost a fifth (19.12%) of its supporters among importers, and the use of the Chinese yuan among domestic importers increased by 36%.
Why is it necessary to maintain the position of the ruble
The abandonment of the US dollar in trading between the two countries led to somewhat unexpected results. Transactions began to be carried out in a single European currency. Only a well-thought-out economic policy will ensure the strengthening of the ruble and expand its volume in foreign economic activity.
Already now, trade permissions do not require any permits; they are conducted directly, without correspondent accounts of other countries. The advantages of using the ruble in foreign economic activity are undeniable both for a particular company and for the country.
• Reduces the negative effects of fluctuations.
• Minimized transaction costs.
• There are no additional costs - you do not need to attract third-party banking organizations for payment.
• Significantly increases the profitability of the sale of goods for private companies.
• Risks to local currency from speculative operations are reduced.
• The ruble is becoming independent from the influence of reserve systems.
Political and economic cooperation between partner countries is being strengthened, which leads to the expansion of markets and the range of goods offered.
To stimulate the growth of fans of the ruble in China, it is necessary to expand investment opportunities specifically for the national currency, increase its stability and create a favorable economic regime for domestic importing companies using the Russian ruble in international financial transactions.
Statistics provided by the Ved-Stat Analytical Group portal

07.05.2020 12:01:32
(Automatic translation)


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