China did not help out the Russians: deposits in yuan brought big losses

Yelena Petrova, Natalia Seibil

The portfolio of each Russian bank has an offer of deposits in the Chinese national currency.

You can place funds for a year or for three years at once - for every taste. The percentages are not impressive enough. Some credit institutions offer to give hard earned money for free – at 0.01%, others have more conscience. A solid offer is considered on the market, for example, to place a deposit in yuan at 2.3% per annum. For comparison, citizens can receive up to 9% on a ruble deposit.

Economists say that the new offer of banks is out of desperation. For credit institutions, transactions with dollars and other euros have moved from the category of super-reliable to high-risk. Customers have no demand for Western currency. Importers themselves have enough dollars and euros, they do not need to sell foreign exchange earnings. If exporters need to pay taxes, they sell their currency and pay in rubles.

The yuan is another matter.

"Our import substitution is taking place from unfriendly imports to friendly ones. In the import of machinery and equipment, 67 enterprises, according to a survey by the Gaidar Institute, switched to Chinese analogues. Naturally, Chinese money is needed to buy them. Hence, our industrialists have a question of free yuan liquidity", - explains economist Nikita Maslennikov.

The demand for yuan is growing in the economy, and banks are tuning up. They have nowhere else to buy Chinese currency on the open market. Therefore, they actively advertise deposits in yuan:

- Deposits for corporate clients – keep deposits in yuan. To the population – keep deposits in yuan. This is a liability. And I can take this liability today, they took it in the morning, and in the evening they sent it to other clients who need a loan in yuan. These are absolutely normal operations, but they are dictated by such an economic situation.

Pro and contra Yuan

Timur Nigmatullin, an investment consultant at Finam, points out that the dollar has become a toxic currency for Russia.

This is especially true for bank deposits within the country. Unexpectedly, negative scenarios may arise for depositors:

- For example, you brought dollars in cash to the bank, and they won't give them to you in cash. There is a risk that they will not be given out by cashless. The yuan significantly reduces these risks.Of course, our population has not got rid of dollars, only it stores them in other jurisdictions.

But Nikita Maslennikov estimates that Russians keep up to $80 billion abroad. The most popular destinations are Georgia, Armenia, Kazakhstan. It is almost impossible to make money on euros and dollars inside the country:

- A weak percentage, banks are reluctant to do this, including for political reasons. And you can earn money on the yuan. Why not? It's everyone's choice.This is where the advantages of storing accumulated in yuan almost end, and the fat minuses begin.

Contrary to popular opinion, the yuan does not belong to a freely convertible currency, but only to a reserve currency, according to the IMF classification. The course for it is set by the Central Bank of China, not the market. Over the past year, the yuan has lost about 17% of its value.

Timur Nigmatullin says:

- There is no such confidence in the yuan as in full-fledged reserve currencies, because the Central Bank of China is not engaged in full-fledged inflation targeting. In general, it is unclear what it is doing: whether the exchange rate targets, or inflation, or stimulates the economy. The goals are vague, and all this is based on the fact that there is no freedom of capital movement. If she suddenly appears, it's hard to say what will happen to the yuan. When it appeared in Russia in 2014, you remember what happened.And then there was a "black Tuesday" in Russia, when the ruble collapsed by almost 15% at the end of the year.

In the absence of free circulation of yuan, they can only be spent in China. If someone switched from Greece or Sochi to Shanghai and Hainan, he can safely open an account in Chinese currency.

There are exotic ways to save money – to invest it in dirhams, says Nikita Maslennikov:

- For citizens, you will go to the Emirates, although there is a dollar, there is an amazing situation – 25 years of dirhams the same exchange rate to the dollar is 3.2.

In fact, the dirham is a substitute for the dollar. Such an ersatz turns out. But, nevertheless, there is a limited benefit. You have realized a dollar deposit – you have much more opportunities to spend it. With yuan – almost only China. Or sell on the foreign exchange market through your forex broker.Timur Nigmatullin advises to refrain from transferring funds to the Chinese currency.

It is much more reliable to keep money in the national currency, that is, in rubles. On ruble deposits, both the rates are high and the risks are low. If you are not satisfied with the yield on ruble deposits, you can invest in securities:

- For example, you can buy fully sanctioned sovereign Russian Eurobonds in dollars. There is no tax on currency revaluation, the yield is around 6%, they pay in rubles at the exchange rate of the Central Bank. Why the extra complexity? Of course, this is a less convenient tool, but more profitable in order to understand it.There are not many cases in the world when banks, and then the state, stimulated citizens to transfer deposits into non-convertible currency.

In Russia, this happened involuntarily. Sooner or later, says Nikita Maslennikov, and we will return to the dollar and the euro. The only question is, when will it happen?

It must be said that none of the deposits covers annual inflation – money burns both in rubles and in yuan, dollars or euros. For the brave, who have accumulated experience in trading dollars and euros, it is possible to speculate well, Nikita Maslennikov believes:

- The most important motive – and what will I earn from them? Well put, well they lie. Percentile? A tenth? The yuan is up to 2.6%. The yuan is fluctuating, but at least I'll earn something here. And then the yuan is actively traded on the market. The state supports this trade. It occurs in the most advanced to have a good speculate. Why not? Those who carried out such operations with euros and dollars, they had a taste, skills, knowledge. Infrastructure with brokerage companies they work with. Why not do it with yuan with such sweeping fluctuations? That's good. Fluctuations are always grounds for expectations of additional profitability. It won't work – they flew by. And tomorrow we got it.For those who like to take risks – in a good way!