Being limited by Western sanctions, the National Bank of Russia (central bank) has decided to open a bilateral Forex swap line, to support trade and investment cooperation between the two countries.
Russia is facing the sanctions since the Crimea crisis, when the escalated conflict in Eastern Ukraine ended with Crimea annexation by Russia and neverending dispute over the authonomy of Donetsk and Luhansk areas.
In October 2014, the Russia’s central bank (CBR) and the People’s Bank of China (PBoC) signed a bilateral currency swap arrangement with 815 billion RUB/150 billion CNY, aiming to boost bilateral trade and direct investment of these two countries.
On the grounds of a good cooperation and negotiation, the CBR and the PBoC have successfully opened several currency swap trades since October 2015 with funds involved ultimately allocating to a limited number of Russian and Chinese counterparties. It was a success due to smooth proceeding, and provided the CBR’s and the PBC’s operational readiness to activate the swap if needed in the future.
This bilateral currency swap could make trade and investment activities between Russia and China easier and it is showing another step in the cooperation between central banks of Russia and China.
Thus is Russia able to solve its external funding after the sanctions and it is counting on a sovereign Eurobond later in 2016.
To read the full official report, click here.
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