8 Sep 2022 16:05

Oreshkin skeptical about advisability of holding reserves in yuan: China has substantial budget deficit

MOSCOW. Sept 8 (Interfax) - Presidential aide Maxim Oreshkin does not share the general optimism about the yuan's prospects as a backbone currency for Russian reserves at a time when the dollar and the euro have become "toxic" due to sanctions.

"My opinion is clear: the dollar and the euro should be exchanged for the ruble, but not for other currencies," Oreshkin said at a plenary session of the Moscow Financial Forum (MFF).

Before the start of the MFF, Finance Minister Anton Siluanov said that the role of the yuan in Russia's international reserves will continue to increase. "Countries' reserves are usually formed in currencies with which there is active trade. Yes, we are now seeing an increase in trade with our eastern neighbor. And, of course, the role of the yuan in reserves will also grow," the minister said in an interview with the Rossiya 24 TV channel. "In the current circumstances, I think that if we're going to create reserves and keep money in foreign exchange reserves, then, first of all, of course, this must be gold, it must by the yuan, as well as a number of other currencies of friendly countries," the finance minister said.

"I may even have a question for Anton Germanovich [Siluanov]: The Finance Ministry is now proposing investment in the yuan and is saying that we need a balanced budget, because investors won't believe us, we won't be able to borrow [with a high federal budget deficit] and so on. But China is a country with a budget deficit of 5% of GDP this year, 5.1% of GDP. Why are we proposing investment [in the yuan]? In this sense, Anton Hermanovich as an investor - why is he investing in a country with a big budget deficit and saying that they won't invest in us if we don't have a zero deficit. Why is that the case?" Oreshkin asked.

"In fact, my opinion has always been that we need to believe in ourselves in the first place, and not look for some good guy in the West or the East who could invest something and then help us," he said. "We need to build a system where we, first and foremost, depend on ourselves and invest in ourselves," Oreshkin said.