Russia is going to settle fertilizer trade in RMB

International Business News – Recently, there is news that, in addition to the RMB settlement business with India, Russian officials, when reporting to the Russian president not long ago, said that they would use RMB to carry out fertilizer trade with Brazil.

In terms of the trend of RMB internationalization, analysis suggests that China’s independent and autonomous monetary policy has played an important role in keeping the exchange rate and economy running relatively stable during the current round of USD strength.

Lu Lei, deputy director of the State Administration of Foreign Exchange, said at the 2022 Financial Street Forum annual meeting that the resilience of China’s foreign exchange market has significantly increased, providing good basic conditions for strong and effective cross-border capital flow management.

Since this year, China’s foreign-related economic activities remain active, the balance of payments in the first three quarters to maintain a basic balance, the current account surplus reached 310.4 billion U.S. dollars, the highest value in the history of the same period, an increase of 56%; direct investment showed a net inflow, cross-border capital flows in a smooth and orderly manner.

Currently, despite the fluctuations in global financial markets, China’s balance of payments structure is sound, and RMB financial assets still maintain strong international attractiveness and have relatively independent earnings performance globally. Lu Lei said that there is still a large potential for global capital to further increase the allocation of China’s financial assets.

In addition, the slowing pace of interest rate hikes in the U.S. dollar has also helped. Pan Gongsheng, vice governor of the People’s Bank of China and director of the State Administration of Foreign Exchange, said not long ago that the dollar may still be shaking at a high level in the short term, and market institutions predict that the dollar’s appreciation momentum is weakening and the strong appreciation cycle may be nearing its end.

The RMB rebounded strongly against the US dollar, and the exchange rate of RMB against the US dollar moved higher in both onshore and offshore markets. The offshore RMB to USD exchange rate started to appreciate from November 26, and it took only 5 trading days to appreciate from around 7.25 to around 6.99, an increase of more than 3.6%. on the 5th, the RMB to USD appreciation broke 7.