China eases controls to allow ruble to depreciate faster
China is easing controls to allow the ruble to depreciate faster, allowing it to fluctuate more freely against the yuan. The value of the ruble currently fluctuates by 10% against the yuan. Since the shutdown of the SWIFT network, the ruble has been trading negatively against USD and Bitcoin (BTC).
China eases controls to allow ruble to depreciate faster against yuan
To help Beijing avoid economic sanctions against Moscow, China is easing government controls on exchange rates to let the value of the Russian ruble fall faster against the Chinese yuan.
Following President Vladimir Putin’s February 24 attack on Ukraine, Western countries cut off several Russian banks from the SWIFT international payment system, causing the ruble to lose about 40% of its value. The Russian central bank can no longer use its foreign exchange reserves to protect the exchange rate.
From Friday, the China Foreign Exchange Trade System said the margin by which the ruble is allowed to vary against the yuan in state-controlled daily exchanges will be quadrupled to 10% above or below the rate. day opening.
Despite its opposition to Western sanctions, China did not condemn Putin’s strike. Chinese companies have yet to follow their Western counterparts out of Russia, but analysts believe they will try to take advantage of increased pressure on Moscow to strike better terms.
In order to maintain the exchange rate, China’s central bank would have to provide Russian buyers of Chinese goods with more yuan than market forces estimated Moscow’s currency was worth in exchange for their rubles.
President Vladimir Putin faces difficulties due to Western sanctions targeting his main banks and close associates. The West moved to sanction him after he announced special military activity in Ukraine. None of his relatives are spared.
Earlier today the UK froze the assets of Chelsea owner Roman Abramovich over his links to President Putin. After decades of success, the ruble is losing more than 40% of its value because of the sanctions. It is still in the ATLs of the exchange rate against the USD, as investors have to exchange 136 RUB for one USD, which is too high compared to 75.25 RUB/USD on February 16, 2022, before the attack.
With the most recent update, Chinese exchange rates will be able to follow the daily fluctuations of the ruble.
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