The yuan is steadily expanding its role in Russia’s financial landscape. Over the last half year, the interest offered on yuan deposits by major banks has climbed from about 1 percent per year to just over 3 percent, while yuan-denominated bonds have seen yields rise into the 4 to 6 percent range. This shift is highlighted in the Central Bank’s risk overview of financial markets, as reported by Kommersant, and underscores a broader trend of increasing commercial use of the yuan in both payments for foreign trade and in domestic currency markets.
According to the Central Bank, the rise in the yuan’s share in cross-border settlements and in over-the-counter and domestic markets continues. On the deposit side, large banks now quote average yuan yields around 3.2 to 3.5 percent annually, up from roughly 1 percent half a year earlier. In the debt market, the yuan offers higher returns for longer maturities, with four to five year bonds delivering roughly 3.5 to 6.4 percent per year. Market participants note that these early-year gains come as investor demand remains modest, with appetite for riskier assets still cautious and investors seeking better compensation for the added currency exposure.
Securities market analysts anticipate that if demand remains tepid, the initial upsurge in returns could slow or reverse as issuers broaden supply and the yuan bond market grows more balanced. Yet over the next two to three years, many currency instruments may see sustained pressure from increasing placements and a stabilizing volume of yuan bonds, which could temper yields. These projections reflect a careful balance between expanding yuan liquidity and the longer-term normalization of demand within Russia’s financial system.
In midweek commentary, market observers noted that the Bondholders Association has approached key government figures, including the finance minister and the head of the State Duma committee on the financial market, requesting the elimination of personal income tax arising from the exchange of substitute Eurobonds tied to currency revaluation. This development underscores ongoing fiscal considerations as investors and policy makers navigate the evolving framework surrounding yuan instruments and their tax implications within the Russian economy.