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China To Launch Yuan Swap Trading With Russian Rubles On Monday

China To Launch Yuan Swap Trading With Russian Rubles On Monday thumbnail
The world was slow to wake up to the new reality in which China is now the de facto IMF sovereign backstop, as Zero Hedge described two weeks ago in “China Prepares To Bailout Russia” when we noted that a PBOC swap-line was meant to reduce the role of the US dollar if China and Russia need to help each other overcome a liquidity squeeze, something we first noted over two months ago in “China, Russia Sign CNY150 Billion Local-Currency Swap As Plunging Oil Prices Sting Putin.”

In fact, it was only this week that Bloomberg reported that “China Offers Russia Help With Currency Swap Suggestion.” But in order to fully backstop Russia away from a SWIFT-world in which the dollar reigns supreme, one extra step was necessary: the launching of direct FX trade involving the Russian and Chinese currencies, either spot or forward – a move away from purely theoretical bilateral FX trade agreements – which would not only enable and make direct currency trading more efficient by sidestepping the dollar entirely, but also allow Russian companies to budget in Chinese Yuan terms. It is no surprise then that this is precisely the missing step that was announced overnight, and will be implemented starting Monday.

From Bloomberg:

China will allow trading in forwards and swaps between the yuan and three more currencies in a bid to reduce foreign-exchange risks amid increased volatility in emerging markets.

The China Foreign Exchange Trade System will begin such contracts with Malaysia’s ringgit, Russia’s ruble, and the New Zealand dollar from Dec. 29, it said in a statement on its website today. That will extend the yuan’s swaps trading to 11 currencies on the interbank foreign-exchange market.

A plunge in Russia’s ruble this month to a record low sparked a selloff in developing nations’ assets, leading to a surge in currency volatility. The new contracts come amid efforts by China to increase the international use of the yuan, as the world’s second-largest economy promotes it as an alternative to the U.S. dollar for global trade and finance. Malaysia and Russia are China’s eighth and ninth biggest trading partners, according to data compiled by Bloomberg.

“This will provide companies with better hedging tools, and at the same time, make currency trading more efficient,” said Ju Wang, a senior currency strategist at HSBC Holdings Plc in Hong Kong. “China won’t stop yuan globalization or capital-account opening because of the volatility in emerging market currencies.”

The CFETS is an agency under the People’s Bank of China.

So while the US continues to parade with “destroying” the Russian economy, even if it means crushing the shale industry, aka the only bright spot, and high-paying job-creating industry in the US economy over the past 5 years, Russia and China continue to be nudged by the west ever closer monetarily and strategically, until one day, as we have long predicted, China and Russia will announce a joint currency, one backed by both China’s “surprising” gold reserves and Russia’s commodity hoard. Then things will get interesting.


16 Comments on "China To Launch Yuan Swap Trading With Russian Rubles On Monday"

  1. J-Gav on Sun, 28th Dec 2014 2:59 pm 

    Although the eventual outcome suggested here is not impossible, it does have a few problems with present-day realities.

    Russia no more wants to depend on China than it does on NATO, for one.

    The BRICS, as well as other “emerging economies,” are almost daily observed to be coming apart at the seams, arguably even faster than the complacent Western slob system which has ruled since at least WWII, for another.

  2. Rodster on Sun, 28th Dec 2014 3:10 pm 

    China will not save the world. Their financial system is based on the West’s financial model. They are worse than we are when it comes to wheeling and dealing.

  3. Plantagenet on Sun, 28th Dec 2014 4:03 pm 

    Pretty smart of China to wait until after the ruble crashes before they start trading yuan for rubles. Now they can get rubles on the cheap.

  4. GregT on Sun, 28th Dec 2014 4:34 pm 

    Nothing new here. The global power shift continues. Washington can either cooperate with the ‘new’ NWO, or continue waging wars in a failing desperate attempt at maintaining USD global hegemony. ( US dominated NWO)

    The world has had enough, the Empire can either go down with a whimper or a bang. The end result will be the same. The only difference being in the body count.

  5. Apneaman on Sun, 28th Dec 2014 4:39 pm 

    infowars? That’s the go to independent “Journalism” of higher thinking.

    Just cause our guys are fuck up’s does not make the other teams elites brilliant by default. It’s a form of self flattery to suggest that it takes some grand chess masters like Putin and Xi to outsmart America. Even without any major wars the U.S. will self implode within a decade or two due to her own stupidity and greed. I also see a strong undercurrent of Obama bashing with these stories from infowars, zerohedge and the like. Does not matter who is in charge; it’s amost over. Russia and China have big troubles too. Everyone does in global overshoot. Their failures will not improve life in the west either.

    Market and State Regulation Failure at the Heart of Russian Recession

    Sliding oil prices and sanctions are not the only cause of the recession, says Aleksandr Buzgalin, professor of political economy at Moscow State University. – December 26, 2014

  6. steve on Sun, 28th Dec 2014 10:06 pm 

    These articles are bull shit….I quit going to our finite world after Gail was touting the Russians saying a drop in oil prices will not affect Russia….I think I am going to have to start going to Zero Hedge to get my info….least there they don’t take themselves so serious..

  7. Makati1 on Sun, 28th Dec 2014 11:48 pm 

    steve, ALL sites are spin. The idea is to know which way the wind blows, not if it does. Infowars is about a week late with this news. It was on Zerohedge long ago as well as other sites outside the US MSM Iron Curtain.

    GregT, the deniers are rampant or overloaded with the USSA gov’t coolaid, or both. Between Russia and China, the power base is stronger than in the West. Last count 28 central banks had agreements to swap yuan/renminbi for their own currencies, cutting out the USD for trade and reserves.

    I have not seen any proof that china is failing or that Russia is really hurting and I have read hundreds of articles from at least 40 sites in the last few months about the subject. These days, ALL US/EU “news” is lies with no proof. The world is laughing at the US and it’s puppet-sock leader and trying to distance itself as far from DC as possible.

    Those above that say different are afraid that their world is dissolving around them. Denial is the easiest way to avoid preparations. I suppose that all empires had them in their last years.

  8. PrestonSturges on Mon, 29th Dec 2014 1:45 am 

    Reading infowars is like drinking paint thinner while hitting yourself in the head with a hammer – it does not make you any smarter.

  9. bobinget on Mon, 29th Dec 2014 6:06 am 

    Has everyone missed the point?

    If China brings Russia onto its block, along with Iran, Venezuela, all of China’s OIL problems, solved.
    No fleets of aircraft carriers deployed, no nuclear
    submarines, no stealth, drone missiles launched…..
    Not a single shot fired.

    Currently, US buys oil denominated in USD. What a fantastic deal. WE (US) trade faith in American
    military ‘protection’ that underpins USD value.
    In return, we import over seven Million
    Barrels daily of the most precious of commodities
    enabling the biggest ‘defense’ industrial complex
    the planet will never see again. Bottom line, we trade military ‘invincibility’ for almost free industrial ‘feed’.

    In all fairness, China got a three thousand year jump on US ‘gun-boat’ diplomacy.

    Russia, Venezuela, now combined under China’s
    economic umbrella have become China’s crude oil rich, uncles. All Russia, Venezuela, Iran, Ecuador,
    Algeria, needed was billions in foreign development capital.

    Saudi/US Fail:

    The US, helpless to stop Islamic militancy in Africa
    and Mideast by airpower alone will persist in pitting tribe against tribe, sect against sect. In short, the same tactics that destroyed ‘The British Empire’.
    Bermuda, Turks & Cacos, B. Virgin Island, are still in the Empire.

    Eventually, after another ten years of bleeding, even Iraq will be deemed not worth it.

    Bottom line. Only in economic wars are there winners.

  10. Makati1 on Mon, 29th Dec 2014 7:52 am 

    Right on, Bobinget!

  11. Makati1 on Mon, 29th Dec 2014 8:13 am 


    “Swiss fall behind in race to become Chinese currency hub”

    And the beat goes on….

  12. JuanP on Mon, 29th Dec 2014 9:46 am 

    I am on the record about where I stand regarding US attempts to achieve total global hegemony. I want the US government to fail because I have always liked living in a multipolar world. I hope the USA loses the American-Russian War.

    This last law passed in the USA regarding Russia is simply revolting and repugnant. I can’t accept it, it is offensive. I think I can’t stay and pay taxes here any more. I feel like I am being forced to leave the USA against my will.

    I want Russia and China to remain sovereign, independent nations and lead the world in that direction. All countries have the right to do as they please and the USA needs to stop interfering in other countries’ businesses. The world is completely fed up with American bullshit.

    I am so frigging tired of all the crap the US government has been doing all over the world since before I was born. Guys, just like most Americans wish migrants would go back home, most people in the world want Yankees to go home, too. The USA has lost humanity’s sympathy and good will through its constant unjustified foreign interventions.

    What a disgusting year this was. I tremble to think how much worse 2015 can be.

  13. Apneaman on Mon, 29th Dec 2014 11:50 am 


    I just gave you a link to an interview with an actual Russian citizen who is pro Russian people anti elite/oligarch/corruption. Did you watch it or are you afraid of anything that will disrupt your black & white narrative? The entire planet is in overshoot on all fronts. No one is in a position of strength. Some are merely less weak and some are better at obscuring things. Rearranging deck chairs is the only game left.

  14. baptised on Mon, 29th Dec 2014 1:19 pm 

    A very good write up Bobinget, Thank You.

  15. surveyor on Mon, 29th Dec 2014 3:03 pm 

    China is a kind of doll stuffed up with US dollars (i. e. US debt). Furthermore, China lacks the real strong currency, as it has too high population to feed with own resources. China is no real big player.

    The whole world is a debt bubble…

  16. Makati1 on Mon, 29th Dec 2014 6:54 pm 

    Apneaman, which way was the wind blowing? Every article/video is there to prove a point. I do not watch most video ‘news’ as it too is spin and not worth the trouble.

    There are ~312,000,000 people in the US today. That means there are ~312 million different views of America. As someone living in Ferguson how safe America is or ask the same question to someone living in Martha’s Vineyard.

    I agree that all governments lie and they outnumber the truths today, but I still see Russia in a position of strength, not anywhere near as weak as the West and especially the USSA. The Russian people know how to survive. The West does not.

    Keep in mind that actions speak louder than words. If you want to know a person/country, watch what he/it does, not what he/it says. Seems Americans have forgotten that truth.

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