Russia is considering a plan to buy $70 billion worth of yuan and other 'friendly' currencies during 2022 to slow the ruble's rise, before switching to a long-term strategy to sell its Chinese currency holdings to an investment fund.
The proposal is one of the measures that would amount to effectively repudiating economic policy implemented for more than 10 years, as the Kremlin fits its strategy amid sweeping sanctions imposed by the United States and its allies over Vladimir Putin's invasion of Ukraine.
The plan received initial support at a special 'strategic' planning meeting of senior government and central bank officials, including the conservative Elvira Nabiulina, on Aug. 30, according to people familiar with the deliberations, who spoke on condition of anonymity to discuss issues that are not publicly disclosed.
Buying the currencies of 'friendly' countries is a problem, the document said, noting that selling yuan holdings "requires a separate agreement with China, over which it will be very difficult to get into crisis."
Other currencies such as the UAE dirham are at 'significant political risk' because those governments may change their policies, while the Turkish lira faces significant risks of devaluing.
The plan calls for spending those funds over the next three to five years to help cover the enormous cost of replacing foreign technology and shifting transport infrastructure to new markets in Asia.
The document does not explain how to deal with ruble sales, noting only that they will strengthen the ruble, helping to offset the inflationary impact of investment spending.
