Russian central bank says yuan liquidity crunch is over
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MOSCOW, Oct 8 (Reuters) -Russia's central bank said on Tuesday that a shortage of Chinese yuan which caused the rouble to slide against the Chinese currency in September had stabilized by the end of last month.
The rouble fell by about 10% against the yuan in September to the lowest level in a year, hit by historically low foreign currency sales by the state and ahead of the expiry of a licence from the U.S. Treasury Department's Office of Foreign Assets Control (OFAC) for commercial banks on Oct. 12.
The licence was issued to allow banks to wind down their operations with the Moscow Stock Exchange (MOEX) after Western sanctions on the exchange and its clearing agent, the National Clearing Centre, were introduced in June.
The sanctions stopped all trade in dollars and euros at MOEX, making the yuan the most traded foreign currency in Russia. There was concern in the market that, after the OFAC licence expires, Chinese banks providing yuan liquidity for exchange trading may pull out for compliance reasons.
"Demand for yuan funding remained high, but by the end of the month, the situation normalized due to decreased demand and increased supply of yuan from certain participants," the central bank said in its monthly risk report.
The central bank said that Russian exporters' net forex sales were down 30% month-on-month at $8.3 billion at the end of September, due to a rising share of rouble settlements in international trade.
It said there was strong demand for yuan through its swap mechanism, leading to a 6.5 percentage points increase in interest rates to 13.5% in September, and recommended banks cut down on lending in forex "to stabilize the situation on the forex market".
Reporting by Elena Fabrichnaya; Writing by Anastasia Teterevleva and Gleb Bryanski
Editing by Andrew Osborn and Susan Fenton
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