Yuan given to Russia under currency swap deal
Moscow has been grappling with a liquidity crisis amid plunging oil prices and Western sanctions
Beijing has given yuan to cash-strapped Russia in “multiple” deals since October under a bilateral currency swap agreement, mainland China’s central bank said in the first public disclosure of the actual use of funds in the scheme.
The People’s Bank of China did not provide the amount used or the exchange rates of the swaps. It said the funds were ultimately used by Russian commercial banks.
China and Russia signed a 150 billion yuan (815 billion rouble) currency swap deal – a kind of mutual credit line between central banks – in October 2014. In case of emergency, or when other funding channels like normal bank loans and borrowings dry up, Moscow can ask for yuan from Beijing.
Maybe there are certain Chinese projects needing funds to proceed
It is unknown to what extent Beijing’s funding has helped Moscow in handling a liquidity crisis amid plunging oil prices and Western sanctions. The rouble has lost more than half of its value against the yuan since the swap deal was signed.
“Maybe there are certain Chinese projects needing funds to proceed,” said Li Dong, a Sino-Russian relations researcher at the China Institutes of Contemporary International Relations. “It’s not that China is stepping up funding for Russia while Russia is being cut off from financial ties with Western countries.”
The PBOC said in a statement on Wednesday that it was open to additional bilateral currency swaps with Russia, and the actual exchange of currencies showed Sino-Russian financial ties had “achieved new development”.
China has signed bilateral currency swap deals with dozens of jurisdictions, including the European Union, South Korea, Hong Kong, Brazil and Malaysia, worth more than 3 trillion yuan.
