By Jack Farchy and Kathrin Hille
Financial Times, London
Sunday, June 8, 2014
http://www.ft.com/intl/cms/s/0/9f686816-ed51-...144feabdc0.html
Russian companies are preparing to switch contracts to renminbi and other
Asian currencies amid fears that western sanctions may freeze them out of the
US dollar market, according to two top bankers.
"Over the last few weeks there has been a significant interest in the
market from large Russian corporations to start using various products in
renminbi and other Asian currencies and to set up accounts in Asian
locations," Pavel Teplukhin, head of Deutsche Bank in Russia, told the
Financial Times.
Andrei Kostin, chief executive of state bank VTB, said that expanding the use
of non-dollar currencies was one of the bank's "main tasks."
"Given the extent of our bilateral trade with China, developing the
use of settlements in roubles and yuan [renminbi] is a priority on the
agenda, and so we are working on it now," he told Russian President
Vladimir Putin during a briefing. "Since May we have been carrying out
this work."
The move to open accounts to trade in renminbi, Hong Kong dollars or
Singapore dollars highlights Russia's attempt to pivot towards Asia as its
relations with Europe become strained.
Sanctions are pushing Russian companies to reduce their dependence on western
financial markets while US and European banks have dramatically slowed their
lending activity in Russia since the annexation of Crimea in March.
The central bank is working to create a national payment system to reduce
the country's dependence on western companies such as Visa and MasterCard.
"There is nothing wrong with Russia trying to reduce its dependency
on the dollar -- actually it is an entirely reasonable thing to do,"
said the Russian head of another large European bank. He added that Russia's
large exposure to the dollar subjects it to more market volatility in times
of crisis. "There is no reason why you have to settle trade you do with
Japan in dollars," he said.
The chief executive of a Russian manufacturer that derives 70 per cent of
its revenues from export in US dollars said his company had done the
groundwork to move its contract settlements to different currencies in the
event of further sanctions. "If something happens, we are ready to
switch to other currencies -- for example to the Chinese yuan or the Hong
Kong dollar," he said.
Alexander Dyukov, chief executive of Gazprom's oil division, has said that
the company has discussed with its customers the possibility of shifting
contracts out of dollars, while Norilsk Nickel told the FT that it was
discussing denominating long-term contracts with Chinese consumers in
renminbi.
"It looks like this is not just a blip -- this is a trend," said
Mr Teplukhin of Deutsche Bank. He added that Russian companies were able to
hedge the risk of further US sanctions by "changing the letter of their
contracts to allow them to change currency if it is necessary."
Some politicians have suggested Moscow should respond to Western sanctions
by entirely "de-dollarising" its economy.
But while in recent discussions with big business about how to make the
economy less vulnerable the government has advocated listing back home and
settling more trade in currencies other than the dollar, it has rejected more
extreme measures.
"As long as Russia is not subject to systemic sanctions, which could
bring an artificial limit to our economy's access to dollars ... then I
don't think Russia will take any steps in order to bring about artificial
de-dollarisation," said Andrei Belousov, economic adviser to Mr Putin.
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