29 Jun 2022 16:57

Moscow Exchange to add currency pairs, Central Bank support will speed up filling cups with liquidity - board chair

ST. PETERSBURG. June 29 (Interfax) - The Moscow Exchange will continue to add new currency pairs, and the support of the Central Bank would help to fill up cups with liquidity, Sergei Shvetsov, chairman of the Moscow Exchange supervisory board, told journalists on the sidelines of the St. Petersburg International Legal Forum.

"Many pairs have been launched on the Moscow Exchange. We're thinking now how to activate the Hong Kong dollar, and there are proposals on the countries of the Persian Gulf. That is, we're going to significantly expand the number of pairs," Shvetsov said.

"But the cup won't heal itself if there are no market makers. Support is needed for this. If the Central Bank is ready to provide such support as a market maker or give market makers the ability to open short positions, that will simply speed up the emergence of liquidity in such cups," he said.

The Central Bank is ready to consider participating in ensuring the liquidity of non-reserve currency markets, though only at the launch, Central Bank Governor Elvira Nabiullina said during the congress of the Russian Union of Industrialists and Entrepreneurs.

"There are problems regarding the point of view of international settlements. We see it as incentivizing the transition to settlements in national currencies. This work has happened before, though it has been rather sluggish, because this hasn't been a matter of the banking system, rather, though, of the contracts themselves. We currently see that, for example, many exporters are ready to switch to other national currencies, but not all importers," Nabiullina said.

"We see mismatches in the transition to national currencies. For example, when one receives export earnings and must sell on the market if there is no demand from importers, as they prefer dollars and euros, accordingly; this is unprofitable for exporters. Therefore, it should be the work of business to transfer most contracts to this level," she said.

Nabiullina said that enterprises do seek to accumulate revenue in national currencies, especially preferring dollars and euros.

"It has been assumed that the Central Bank will perform this task, but then one must understand that this could mean an additional increase in inflation. We would have to print money against depreciating currencies, and these are higher rates. We are prepared to consider certain procedures in order to participate in launching and ensuring liquidity in these markets, though it should be gradual, in our opinion, on market conditions," Nabiullina said.

The Moscow Exchange recently launched trading in new currency pairs, Nabiullina said. "The Central Bank is also discussing participating at the outset, possibly, supporting this liquidity," she said.

The Moscow Exchange launched trading in the Armenian dram and the South African rand on the currency market on June 27. There were also plans to begin trading in the Uzbek som on June 27, but that was postponed.