Large Russian companies are moving some of their cash holdings to Asian banks as the latest sanctions from the US and the EU have raised fears that Russia could eventually be completely shut out of US dollar funding markets.
Megafon, the country's second-largest mobile phone operator, said on Thursday that it had converted 40 per cent of its cash reserves into Hong Kong dollars at Chinese banks, with the remaining 60 per cent being held in roubles.
Sources close to Norilsk Nickel and Novatek said the nickel producer and Russia's second-largest natural gas producer had also started moving some of their foreign exchange holdings out of the dollar.
"We are getting a lot of requests now to help customers move into Hong Kong dollar," said a senior banking working on trade finance and cash management at a large western bank in Moscow. "First it was mainly from US dollar to euro, and now it is increasingly to the Hong Kong dollar."
Analysts and bankers said the moves reflected heightened worries among the country's oligarchs over escalating sanctions. "It is quite surprising that Megafon, a domestically focused company, chooses to place such a large chunk in Hong Kong dollars. It means that they are looking at the worst-case scenario," said Charlie Robertson, global chief economist at Renaissance Capital. "Such an 'Iran-style' scenario is quite unlikely, but there is a sense of concern over it."