On Wednesday, a Moscow securities exchange is scheduled to open direct trading between the Chinese currency, the renminbi, and the Russian ruble. If the market develops, it could eventually cut the dollar out of a portion of Russian and Chinese trade.
Although China’s business with Russia is only a sliver of what it does with the United States, there is room to grow: Russia is the world’s largest energy exporting nation, and China a big consumer as the world’s second-largest economy, behind the United States. And yet when a railroad tanker of Russian oil crosses the border into China, the transaction is settled in dollars.
The new currency exchange is meant to start changing that. The trading system will operate through the Moscow Interbank Currency Exchange, or Micex, which is Russia’s largest stock exchange and also handles foreign currency transactions. It will be the first trading in the Chinese currency outside mainland China and Hong Kong.
“We are pioneers,” a Micex spokesman, Nikita N. Bekasov, said in a telephone interview. In the long term, if other nations moved in the same direction, trading in renminbi outside China could diminish demand for the dollar. Chinese companies exporting to Russia or other countries could instead buy local currency directly, without the need for dollars as a common currency to conduct their business.
The initial volumes on the Russian exchange, though, are expected to be tiny. And they will be tailored to serve Russian banks with clients doing business in China, rather than speculators wishing to build up a portfolio in renminbi, anticipating that its value will appreciate. The United States is among Western nations that have pressured China to let the renminbi appreciate.
Initially, the Micex renminbi-ruble session will last one hour each morning, timed for trading with banks in Russia’s Far East near the Chinese border, many time zones ahead of Moscow.
Exchange officials say they expect only several million renminbi, or about half a million dollars, to change hands daily. The trade is reciprocal, as China in November opened an exchange for rubles and renminbi in Shanghai.
“It has symbolic value,” said Peter Westin, the chief economist at Aton, a brokerage firm in Moscow.
The development coincides with the opening of a trans-Siberian oil pipeline that is expected to expand Russia’s trade with China by freeing up railroad capacity for exports of coal, metals or other commodities, and could make it easier to do business along the remote border.
Cutting the dollar out of this emerging bilateral trade has been a policy goal of the Russian president, Dmitri A. Medvedev, who wants to establish the ruble as a reserve currency held by central banks, to diminish its volatility.
“If China places some part, even a small part, of its reserves in rubles, this is a major boost to the global fortunes of the ruble,” Yaroslav Lissovolik, chief economist at Deutsche Bank in Moscow, said in an interview.
“Clearly the dollar will remain the key pillar of the global financial architecture,” Mr. Lissovolik said. “But this is one of the ways some of the emerging markets want to raise the profile of their currencies.”
The initial daily trading session is mostly intended to test the market and the settlement systems for the Chinese currency, whose export is restricted by Chinese capital controls, the Micex spokesman, Mr. Bekasov, said.
Renminbi are hard to obtain outside China, because of Beijing’s anticipation that their value will rise if China succumbs to American pressure to liberalize its currency. Several banks from China, which will be identified at the opening session on Wednesday, have agreed to support liquidity on the Russian market by providing renminbi, Mr. Bekasov said.
The Micex has a history of establishing market rates between currencies: It opened in January 1992, just a few weeks after the collapse of the Soviet Union, as a trading platform for banks wanting to create a market-based exchange rate between the dollar and ruble.
To mark Wednesday’s occasion, the Chinese ambassador to Russia, Li Hui, plans to strike the opening bell at Micex and then attend a celebratory brunch.
“We thought about trying to make Chinese food,” Mr. Bekasov said of the planned festivities, “but instead decided to make Russian food because it would be more interesting for the Chinese.”