By Guy Faulconbridge and Darya Korsunskaya
MOSCOW (Reuters) -Russia said it would resume foreign currency interventions with the sale of yuan from Friday, underscoring the growing importance of China’s currency in Moscow’s efforts to ensure economic stability amid Western sanctions.
After the West imposed the most severe sanctions in modern history over the war in Ukraine, Russia’s economy has shown remarkable resilience but the world’s biggest producer of natural resources is now turning increasingly towards China.
Chinese students have flocked to Russian universities, Mandarin graces signs in Moscow tourist spots alongside English and Russian, and President Vladimir Putin has touted a “no limits” partnership with President Xi Jinping.
Russia’s finance ministry, which along with the central bank led Moscow’s economic response to the sanctions, said it would sell 54.5 billion roubles ($798 million) in foreign currency from Jan. 13 amid lower oil and gas revenues.
“In order to increase the stability and predictability of domestic economic conditions, as well as to reduce the impact of volatile energy market conditions on the Russian economy and public finances, the Finance Ministry will resume operations for the purchase/sale of liquid assets,” the ministry said.
Russia’s 2023 budget is based on a Urals blend price of around $70.1 a barrel, though Russia’s main blend is currently trading at below $50 a barrel. Russian nominal GDP is likely to be $2.14 trillion this year, the highest level since 2013, according to the International Monetary Fund.
In Russia, where the U.S. dollar was king for years following the collapse of the Soviet Union in 1991, China’s yuan, or renminbi, has become a major player in Moscow since the imposition of Western sanctions.
Its share of the currency market reached 48% in November, MOEX Group said last month, up from less than 1% at the start of 2022.
The Russian central bank said it would carry out forex transactions on the yuan market of the Moscow Exchange – the yuan-rouble for settlement tomorrow (CNYRUB_TOM).
“To minimize the impact of these operations on the dynamics of the exchange rate, the Bank of Russia will buy (sell) foreign currency on the market evenly during each trading day of the month,” the bank said.
($1 = 68.6875 roubles)
(Reporting by ReutersWriting by Guy FaulconbridgeEditing by Gareth Jones)