China Offers Russia Help With Currency Swap Sugges

Two Chinese ministers offered support as President seeks to shore up the ruble without depleting foreign-exchange reserves.

China will provide help if needed and is confident Russia can overcome its economic difficulties, Foreign Minister Wang Yi was cited as saying in Bangkok in a Dec. 20 report by Hong Kong-based Phoenix TV. Commerce Minister Gao Hucheng said expanding a currency swap between the two nations and making increased use of yuan for bilateral trade would have the greatest impact in aiding Russia, according to the broadcaster.

While the offer won’t relieve the main sources of pressure on the ruble -- capital outflow tied to plunging and sanctions linked to Russia’s annexation of Crimea from Ukraine - - the currency gained 3.1 percent against the dollar by 12:37 p.m. in Moscow. The was little changed, and the yield on Russia’s 10-year bond fell 30 basis points to 13.3 percent, according to data compiled by Bloomberg.

“In the current conditions, any help is very welcome,” Vladimir Miklashevsky, a strategist at Danske Bank A/S, said by e-mail. “Yet, it can’t substitute the losses of the Russian banking system and economy from western sanctions.”

Strategic Importance

Russia, the biggest energy exporter, saw its currency tumble as much as 59 percent this year. Putin asked business leaders last week to report on plans to sell foreign currency revenues and to engage in responsible foreign exchange operations, Vedomosti newspaper reported today. Former Economy Minister said Russia was entering a full-fledged economic crisis.

A Chinese Commerce Ministry news official, who asked not to be named as part of the rules, said his department declined to comment on the Phoenix TV report, and a faxed question to the Chinese central bank went unanswered. President Xi Jinping last month called for China to adopt “big-country diplomacy” as he laid out goals for elevating his nation’s status as the world’s second-largest economy.

“Many Chinese people still view Russia as the big brother, and the two countries are strategically important to each other,” said Jin Canrong, Associate Dean of the School of International Studies at Renmin University in Beijing, referring to the backing of Communist China in its first years. “For the sake of national interests, China should deepen cooperation with Russia when such cooperation is in need.”

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