Yuan Hits Five-Month High as Russia's Finance Ministry Ramps Up FX Purchases

Yuan Surges Past 12 Rubles, Reaching March Highs

The Chinese yuan closed the week at 12.24 rubles on the Moscow Exchange, rallying all five trading days and touching an intraday high of 12.25 — its strongest level since March 20. The weekly jump of 51 kopecks came as the ruble weakened broadly, with the Bank of Russia's official dollar rate rising by 2.71 rubles to 82.17 and the euro by 3.65 rubles to 94.84.

The main catalyst was the Russian Ministry of Finance's announcement that it would purchase foreign currency and gold under the budget rule at a pace of 6.5 billion rubles per day from August 7 through September 4. After netting out the central bank's mirroring sales of 0.58 billion rubles per day, daily net buying will rise to 5.92 billion rubles — a 22.8% increase from the previous period. Markets had expected a reduction in purchases, making the larger volume a bearish surprise for the ruble.

Adding to the pressure, the Bank of Russia noted that rapid money supply growth was amplifying pro-inflation risks and that a wider budget impulse could force the regulator to maintain tight monetary policy longer. In a counterintuitive twist, the cost of yuan on the Moscow Exchange money market plunged to an annualized rate of just 0.81% according to the RUSFARCNY indicator, down from 3.27% the prior week, signaling a glut of ruble liquidity or a sharp drop in yuan funding demand.

Inside the Ruble's Slide: Budget Rule Expansion and Inflation Signals

The Budget Rule Surprise That Caught the Market Off Guard

The MinFin's decision to raise daily net FX purchases by nearly a quarter was the week's dominant driver. The prior period had seen net purchases of 4.82 billion rubles per day, and market participants had positioned for a seasonal tapering — not an acceleration. The surprise expansion injected significantly more ruble liquidity into the FX market, directly weakening the currency. With purchases running through early September, this flow will remain a headwind for the ruble for several weeks.

How the Central Bank's Inflation Warning Fits In

The Bank of Russia's assessment that rapid money supply growth is fueling pro-inflation risks adds a macro layer to the depreciation. The regulator explicitly flagged that the ongoing expansion of the budget impulse could require a longer period of tight policy to bring inflation back to the 4-5% range. A weaker ruble now acts as an additional import-price driver, complicating the inflation outlook and potentially delaying any future policy easing.

The Odd Drop in Yuan Funding Costs

The collapse in the yuan money market rate from 3.27% to 0.81% is unusual during a ruble sell-off. It likely reflects a combination of ample ruble liquidity and reduced demand for yuan-denominated borrowing. For corporate treasurers, the ultra-low rate creates a window to fund yuan obligations cheaply, provided they have access to the Moscow Exchange's yuan loan market. This split between spot depreciation and money market calm suggests the ruble's weakness is being driven primarily by structural FX purchasing rather than a funding squeeze.

Eyeing the Year's High

The quick move from 11.76 to 12.25 has put the 2026 year-to-date high of 12.65 rubles per yuan firmly in traders' sights. With the MinFin purchase schedule now locked in, seasonal August patterns favoring ruble weakness, and no immediate countervailing flow, market participants may test that resistance sooner rather than later.

Implications for Importers and Ruble-Denominated Positions

For importers with yuan payables: The yuan gained 51 kopecks in a single week, directly raising costs for goods and services priced in yuan. The sharp drop in the RUSFARCNY yuan funding rate to 0.81% annually provides a low-cost mechanism to secure yuan now — a stark contrast to the previous week's 3.27% — which can lock in current exchange rates and avoid further ruble erosion if the pair moves toward 12.65.

For exporters with yuan revenues: Ruble weakness boosts the ruble-equivalent value of incoming yuan proceeds, benefiting exporters that convert foreign earnings. The MinFin purchase schedule ensures the ruble-yuan rate will receive a steady downward bias through September 4, potentially extending the revenue tailwind.

For ruble savers and households: The rising yuan erodes the purchasing power of ruble-denominated savings for Chinese goods. With the yuan approaching the year's high, household budgets for imported electronics, components, and travel linked to yuan-based pricing face increasing pressure.