The money market of the Moscow Exchange has practically ceased to work with dollars and euros. The share of the once major foreign currencies in transactions fell below 1%, having decreased by more than 20 times. As expected, the yuan has become the main alternative to foreign currency, but the Chinese currency cannot yet reach the same volumes, while the absolute majority of transactions are carried out in rubles. This was told to RBC by the director of the money market department of the site Sergey Titov.
According to him, at the beginning of 2022, rubles accounted for about 80% of positions, for dollars and euros – 20%, but after the start of the war, the share of foreign currency began to decline sharply. Titov noted that now it is no more than 1% of all transactions on the money market of the Moscow Exchange. Now the share of rubles in the money market is 94%, about 5% is accounted for by yuan and about 1% by dollars and euros. There has not yet been a complete rejection of Western currencies, but "market participants are actively shifting," Titov claims.
The money market of the Moscow Exchange should be distinguished from the foreign exchange market, where the exchange (purchase/sale) of different currencies takes place. The money market is a platform for loans: some players place money in different currencies, others attract these funds at a market rate. In addition to legal entities, government agencies are also represented on the market: the Central Bank, the Treasury, VEB and the Pension Fund.
In addition to the reduction in foreign exchange positions of Western countries, since the beginning of the year there has been a significant decrease in trading volumes on the market. The open REPO position (sale of an asset with an obligation to repurchase later) with a central counterparty and clearing participation certificates (CPC) (one of the key indicators of the money market — The Insider) has collapsed from an average of 4.5 trillion to 3.7 trillion rubles since the beginning of the year, and at the lows fell and did up to 3.5 trillion. However, Titov claims that the market is "gradually recovering."
“If earlier participants entered into deals for a week or a month, then after the start of the war they began to make more overnight (one-day) deals, reducing the planning horizon. In connection with leaving overnight, we saw a sharp surge in trading volumes, transactions began to be made more often, therefore, to assess volumes, we look at an open position, it is more indicative in terms of market assessment, ”said another trend, the director of the Moscow exchange department.
Titov claims that in autumn the market calmed down a little and the average term of transactions increased to three days. Structural changes in the operation of the market, according to him, did not occur: most counterparties retained their positions, and the market lost only foreign players, for whom the site is still closed by law. The share of foreigners was estimated at 8-10%, now their positions are occupied by Russian players. Also, in the near future, non-residents from “friendly countries” may be admitted, which should increase trading volumes and market activity in principle, Titov believes.
After the outbreak of the war against Ukraine, Russian businesses and individuals began to reduce their positions in foreign currency due to the risks of sanctions. The peak of the reduction in currency positions came at the end of spring – the beginning of summer, when Western sanctions affected the assets of Russian investors, as a result of which assets worth several billion dollars were frozen in brokerage accounts. Another surge in the rejection of foreign currency occurred at the end of July, when the Central Bank began to actively prepare for sanctions against the National Clearing Center (NCC), which could lead to a halt in exchange trading in the dollar and euro.