19 March 2026
The Russian banking system is facing a severe shortage of Chinese yuan—the de facto only foreign currency available for unrestricted international trade.
On Thursday, overnight yuan loan rates on the Moscow Exchange soared to 44% per annum—that’s how much banks were willing to pay each other to borrow the Chinese currency. Throughout last year, and at the beginning of it, yuan rates hovered around zero. In February, they unexpectedly jumped to 10%, fell back to 6% per annum in early March, and since the beginning of this week, they have sharply increased again: 14% on Tuesday, 20% on Wednesday.
The yuan deficit is the result of a decline in export revenues due to the drop in oil prices at the end of last year, as well as the Ministry of Finance’s refusal to sell foreign currency from the National Welfare Fund, explains economist Yegor Susin. As a result, “the market is being torn apart,” he notes.
Due to the growing yuan deficit, banks have been turning to the Central Bank for yuan loans almost daily since early February, borrowing currency through swap transactions. Last year, demand for such loans was zero, and by March 18, credit institutions had exhausted the Central Bank’s entire limit of 5 billion yuan, according to its statistics .
“Unlike dollars and euros, which could be easily borrowed from the Western financial system, Russian companies receive yuan primarily from trade, as Chinese banks practically do not lend yuan to Russian companies,” notes Mikhail Vasiliev, chief analyst at Sovcombank. However, foreign currency trading has significantly decreased: in February, the largest exporters sold only $3.5 billion on the exchange—a third of what they sold in the same month a year ago.
The Finance Ministry’s decision to halt sales of yuan from the National Welfare Fund in order to preserve the fund’s remaining liquid assets deprived the market of another $3 billion in yuan supply per month, according to Alexander Potavin, a leading analyst at Finam.
The yuan shortage was the main reason for the ruble’s sharp decline, according to Igor Sokolov, an analyst at Alor Broker. Since the beginning of the week, the yuan-to-ruble exchange rate has jumped 7% and on Thursday hit a new high since February of last year—12.65 rubles per yuan. The dollar exceeded 86 rubles for the first time in a year, and the euro approached 100 rubles for the first time in six months (99.5 rubles per euro on the interbank market).
“The market has been operating for a month with a current oil price of around $45 per barrel, which implies a relatively low inflow of export revenue; revenue from current prices of $80-100 per barrel will enter the economy with significant lags, and there’s no one to balance the market in the current situation,” Susin notes.
To balance the market, the Central Bank might need to increase the provision of yuan swaps to banks, and the Ministry of Finance should begin placing available yuan on the market, the expert suggests.