Russian central bank wants mandatory yuan reserves for lenders
FILE PHOTO: Elvira Nabiullina, Governor of Russian Central Bank, speaks at the annual meeting of credit institutions with the Central Bank's management in Moscow, Russia March 5, 2026. REUTERS/Anastasia Barashkova/File Photo
MOSCOW, April 28 - Russia's central bank wants commercial banks to hold mandatory reserves of yuan to prevent shortages of the Chinese currency in the foreign exchange market and rein in excessive lending, Governor Elvira Nabiullina said on Tuesday.
Interest rates on yuan swaps jumped above 40 per cent in March, driven by heavy yuan lending and reduced inflows of the currency as weak oil prices hit Russia's export earnings early in the year.
"When clients left with their yuan, many banks went searching for yuan in the money market. It is a short-term market, and the rates there soared," Nabiullina told a banking conference in Moscow.
The yuan has become Russia's most-traded foreign currency after Western sanctions on many Russian banks and on the Moscow Exchange curtailed dollars and euro trading, pushing it into the over-the-counter market.
"Banks might not be pleased, but we are considering the feasibility of introducing a separate regulation on foreign currency liquidity because this isn't the first time rates have soared like this," Nabiullina said. "It seems to us that banks should have learned from past experience that such volatility is unnecessary."
She said the central bank would first consult commercial lenders on the proposal. Nabiullina was speaking ahead of the planned resumption of foreign exchange operations for the fiscal reserve National Wealth Fund in May.
With oil prices - Russia's main export - now above the cut-off price of $59 per barrel that determines whether revenues are saved or used to cover the budget deficit, the state will be buying yuan in May.
Dmitry Pyanov, deputy CEO of Russia's second-largest bank VTB, said on Monday that such purchases risk destabilising the domestic foreign exchange market in the short term.
