Russia looks to circumvent Western sanctions with China Forex swap

The Bank of Russia is reporting that Russia and China have agreed to open a bilateral Forex swap line, to boost trade and investment cooperation.

Largely cut off from global capital markets by Western sanctions, Russia is stepping up efforts to secure access to external funding, including setting plans for a sovereign Eurobond later this year.

The Russian central bank said that it and the People’s Bank of China (PBOC) successfully tested forex swaps in 2015, and were ready to enact the forex swap if needed.

Earlier, Russia and the PBOC had opened a forex swap line for 815 billion rubles (USD $11 billion) and 150 billion yuan (USD $23 billion), Russia’s central bank said.

According to Marketwatch, Moscow regards China as one of its closest allies, and aims to get financial support from Beijing in the energy sector (suffering from low commodity prices) and financial markets, as Russia’s relations with the West remain strained following Russia’s annexation of Crimea in March 2014 and conflict in eastern Ukraine.

To see the official Bank of Russia announcement click here.

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