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Financial Analytics: Science and Experience
 

The system of bilateral currency swap agreements: in search of promising partners of Russia in East Asia

Vol. 8, Iss. 10, MARCH 2015

PDF  Article PDF Version

Available online: 12 March 2015

Subject Heading: FINANCIAL INSTRUMENTS

JEL Classification: 

Pages: 33-40

Arapova E.Ya. Moscow State Institute of International Relations (University) of Ministry of Foreign Affairs of Russian Federation, Moscow, Russian Federation
arapova_katrin@mail.ru

Importance In the context of global financial crisis and the need for reducing dependence on international reserve currencies, mainly, on the US dollar, the necessity of cutting down of dollar settlements with Russian trade partners, mainly from the East Asian countries, and execution of trade contracts in national currencies become highly relevant. In this regard, the issue of the possibilities and perspectives of creating the network of bilateral currency swap agreements with the key Asian partners of Russia assumes special importance.
     Objectives The key objective of the analysis is to reveal the potential economic effects of bilateral currency swap agreements and to determine the most promising partners for Russia among the East-Asian countries.
     Methods The study aims to determine the most promising Russian partners on the basis of a quality scoring system with a 10-point scale. The choice of the potential partner countries is based on the wide range of indexes: from trade and investment ties with Russia to macroeconomic indicators, reflecting the countries' economic systems sustainability. Besides, the research applies the econometric analysis technique. In particular, it helps to calculate the ratios of currencies' fluctuations options in order to identify the most stable among them.
     Results In the article, I consider the Russian key trade and investment partners among the East Asian countries, and also identify the countries, which are characterized by relatively more stable condition of national financial systems and by high liquidity parameters. Based on the complex data analysis, I identify the wide range of countries, which represent the greatest strategic interest for entering into bilateral currency swap agreements and settling external commerce payments in national currencies. Besides, the paper evaluates the potential interest on behalf of the Asian States in widening partnering cooperation with the Russian Federation by means of signing of the bilateral currency swap agreements.
     Conclusions and Relevance I conclude that in order of priority Japan, Republic of Korea, Singapore, Hong Kong, and India (Malaysia and Thailand to a lesser extent is suitable for that purpose) may become the highest potential partnering countries in the system of the Russian bilateral currency swap agreements with the Asian countries.

Keywords: bilateral currency swap agreements, financial cooperation, internationalization, Russian ruble, East Asian region

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