(FT) China says it will double the allowable trading range of its currency with the rouble as it moves to bolster trade with sanctioned Russia.
The China Foreign Exchange Trade System said that it will allow the currency cross to fluctuate 10% in either direction of the established daily midpoint, an increase from the previous 5%.
CFETS says the new trading band will become effective on Friday, after getting the nod of China’s central bank and the State Administration of Foreign Exchange.
The move by China comes amid growing sanctions imposed by Russia by western countries. Beijing has been a key customer of Russia’s oil and natural gas, with the announcement seen as a move to strengthen bilateral relations between the two countries.
Ken Cheung, the chief Asian forex strategist at Mizuho Bank, says the move by China will boost market liquidity and deepen trade. Other analysts say the boosted trade band is a practical response for boosting trade between the two nations in light of the sinking rouble.
Analysts also opine that the trading band would make the exchange rate more flexible and allow China’s businesses to be paid at a favorable rate.
CNYRUB is down -0.86%.
