Ruble-Yuan futures are set to begin trading on the Moscow Exchange (MOEX) on March 17, RT reports on Thursday, citing Moscow Exchange Deputy Chairman Andrei Shemetov.
According to Shemetov, the current number of tools offered on the Moscow Exchange that allow investors to hedge currency risks isn’t sufficient, hence why the exchange will roll out the new hedging instrument as quickly as possible.
“We hope that in the near future this tool will take the third position on the futures market and will allow producers to hedge their currency risks and increase the trade turnover between Russia and China,” he said.
Shemetov said that in the spot market the ruble-yuan currency pair is already the third most popular in terms of volume and that circulation of China’s currency has recently increased ten fold.
The Moscow Exchange hopes that the futures will be liquid enough so that manufacturers and suppliers could boost the trade turnover between Russia and China.
In 2014, bilateral trade between Russia and China grew by 6.8% to $95.28 billion.
Over the weekend China’s Foreign Minister Wang Yi said Russia and China will boost bilateral economic cooperation in the fields of energy, transportation, and development of the Far East.
Yi said that Russia and China are aiming to bring bilateral trade to $100 billion in 2015.
China and Russia recently switched to domestic currencies in trading by using such financial tools as swaps and forwards.
Both nations have long been looking at ways to cut the dollar’s role in international trade. The question is significant for China as 32 percent, or $4 trillion of its foreign exchange reserves are in U.S. bonds (as of the end of December 2014), which means there is a vulnerability to fluctuations in the exchange rate.
China’s yuan has recently emerged as one of the world’s top five payment currencies, overtaking the Canadian dollar and the Australian dollar, according to global transaction services organization SWIFT.
The China International Payment System (CIPS), which is China’s long-awaited global payment system to process cross-border yuan transactions is said to be ready and could launch as early as September.
China has started to advertise the renminbi as the ‘new world currency’ as it continues to ramp up its drive for the globalization of its currency.
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