Russia's Central Bank has issued a message about successful completion of the testing of a bilateral foreign-exchange swap line 'yuan-ruble' in cooperation with the People's Bank of China.
"The central banks of the two countries have successfully tested a currency swap since October 2015, which allowed to allocate funding for a limited number of Russian and Chinese counterparts. The test transactions allowed the Bank of Russia and the People's Bank of China to ensure operational readiness to enact the swap in the future if needed," the website of the bank says.
The report states that the amount of the swap line between the two central banks amounted to 815 billion rubles and 150 billion yuan. "The swap agreement in local currencies boosts trade and investment cooperation between Russia and China," the bank explained the importance of the mechanism.
The head of the program 'Russia in the Asia-Pacific region' of the Moscow Carnegie Center, Alexander Gabuev, said in an interview with the correspondent of Vestnik Kavkaza that the ruble-yuan swap will really help to save on the currency conversion. However, until recently this tool hasn't been used practically due to big jumps of the ruble, as well as due to the volatility of the Chinese currency.
"Now the situation has stabilized a bit, but only the market can show us the demand for this tool," the expert stressed.
He noted that Russia is committed to economic cooperation with China, despite the slowdown in the Chinese economy. "This slowdown will obviously continue. At the same time, there is a growth in China and consumption of Russian exports of goods and raw materials is growing in different groups. It is obvious that the base metals consumption in China will not increase, because there is a large oversupply. The oil situation is not clear, but now its consumption is growing and Russia even competes with Saudi Arabia in this niche".
"The whole world is in the area of slow growth or stagnation, so the fight for any market is the right thing," the expert believes.
However, according to the analyst, we shouldn't expect the full transition to national currencies in settlements between Russia and China in the near future. "The large trading volumes are still in dollars, because it is much easier and more convenient," Alexander Gabuev concluded.
An advisor on macroeconomics to the director general of the brokerage house 'Opening', Sergei Hestanov, in his turn, recalled that at the moment more than 90% of Russia's trade with China is still carried out in dollars. "The current aim is to develop trade in national currencies. And for this purpose banks will need the ruble-yuan swap. That is why the Central Bank promotes it. But it will take at least several years before the volume of transactions between the two countries in rubles and yuan will reach a significant value," the expert said.
He also believes that Russia is interested in the development of relations with China, despite a slight reduction in the Chinese economic growth. "China occupies an important place in many positions due to the competitiveness of Chinese goods at a price, and, most likely, this situation will continue regardless of the rate of growth of the Chinese economy," an advisor on macroeconomics to the director general of the brokerage house 'Opening' stressed.
According to Sergei Hestanov, the complete transition to the settlements in national currencies will be possible not earlier than in 20 years.
