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Yuan rate correction may contribute to ruble weakening — VTB24 bank

August 14, 2015, 11:24 UTC+3 KHABAROVSK
Taking into account that China is a large consumer of raw materials and a large trade partner of Russia, yuan rate correction may contribute to weakening of the ruble
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© AP Photo/Vincent Yu

KHABAROVSK, August 14. /TASS/. Changes in the rate of the Chinese currency - yuan - may contribute to the weakening of the ruble, an official with the investment department of VTB24 Bank in Russia’s Far East told TASS on Friday.

"China is changing the rate of yuan due to worsening of trade balance. Taking into account that China is a large consumer of raw materials and a large trade partner of Russia these factors may contribute to the ruble weakening," said Darya Yermolenko, head of the investment department of VTB24 in Russia’s Far East.

"On the one hand the Chinese exports may drive Russian products from the market, on the other hand China may import less hydrocarbons," she added.

"We don’t tend to overestimate the impact of this factor because it is early to speak about a serious devaluation: the yuan fell by less than 3%, which is incomparable with more than 50% devaluation of the ruble," she said.

"In a longer perspective we are still positive about the yuan - the Chinese economy will be growing much faster than other developing economies, the country has a high potential of productivity growth. Considering this we don’t expect any drastic corrections of the yuan rate in the country where the stability and predictability of regulators is appreciated. Potentially, the yuan will become part of the SDR basket and will be used as a store value alongside with other main currencies," she said.

On Tuesday, by the decision of the National Bank of China the official exchange rate of the yuan against the dollar was reduced by 1.9% - to 6.2298 yuan per 1 dollar. As the regulator explained the decision "on optimization of design procedure" of the exchange rate was made taking into account surplus in China’s foreign trade as well as strong positions of the yuan against other countries’ currencies.

On Wednesday, the Chinese central bank reduced the Renminbi /the official name of the yuan/ exchange rate against the US dollar by another 1.6% to 6.33 yuan per dollar.

On Friday, after the three day devaluation the regulator raised the rate of yuan against US dollar by another 0.06% to 6.39 yuan per dollar.

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