The yuan liquidity shortage in Russia, triggered by a sharp rise in money market rates, has hit the new segment of government bonds (OFZs).
By March 19, prices for both yuan-denominated government bond issues had fallen below par, to 95.7–96.1%. Yields on the bonds rose to 7.64–7.94% per annum, compared to 6.08% to 7.07% when they were issued in December 2025, according to Vedomosti.
The crisis began in January 2026, when the RUSFAR CNY yuan exchange rate indicator soared several times. By February, the situation had worsened: the rate jumped by 9.07 percentage points to 10.08% and has since demonstrated extreme volatility, reaching 43.93%. Experts cite import payments before the Chinese New Year, when liquidity was drained from the Russian market, as one of the reasons for the shortage. The situation was also influenced by the placement of OFZs in December, totaling 20 billion yuan, which, according to Alexander Afonin, head of bond market analysis at Sinara investment bank, absorbed significant amounts of foreign currency from the banking system.
Amid expensive funding, investors began reducing their positions in yuan bonds to maintain their own liquidity. While purchasing securities through repo was previously profitable due to near-zero rates, systemic volatility has now reduced the appeal of this strategy, notes Alexandra Nikiforova, a debt market analyst at Euler. The weakening ruble is partly curbing market pressure: since the end of January, the yuan has appreciated by 14% to 12.47 rubles, generating income for holders due to foreign exchange revaluation.
Analysts expect the situation to stabilize in the spring, says Artem Privalov, portfolio manager at Alfa Capital. The deficit could be eased by the scheduled redemptions of corporate bonds by Rusal and Gazprom totaling 6 billion yuan, as well as an influx of revenue from exporters amid the rise in Brent crude oil prices to $112 per barrel. Furthermore, the Ministry of Finance plans to launch Federal Treasury repo operations in yuan, and banks have already begun actively using Central Bank swaps to plug currency gaps. A key event will be the May redemption of $3 billion in Eurobonds, the proceeds of which the ministry had previously planned to reinvest in new yuan-denominated instruments.