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Russia Eyes Mandatory Yuan Reserves to Tame Currency Shortages. Russia’s central bank is considering requiring commercial lenders to hold mandatory reserves in Chinese yuan, aiming to prevent recurring shortages of the currency in domestic markets. The proposal follows a sharp spike in yuan swap rates—above 40% in March—triggered by heavy borrowing and reduced inflows of the currency. Officials say the imbalance emerged as lower oil prices cut export revenues, limiting the supply of yuan entering the Russian financial system. Governor Elvira Nabiullina framed the measure as a way to curb excessive lending in yuan while stabilizing liquidity conditions. The move reflects the yuan’s growing dominance in Russia, where Western sanctions have curtailed access to dollars and euros and pushed trade into alternative currencies. Although banks may resist stricter reserve requirements, the central bank argues that repeated episodes of volatility justify tighter regulation. Authorities plan to consult lenders before implementation, a sign of caution amid concerns about market disruption. Meanwhile, upcoming state purchases of yuan -enabled by recovering oil prices- could further influence liquidity, with some bankers warning of short-term instability.
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