Little over a year after the invasion of Ukraine, the Chinese yuan has replaced the US dollar as the most traded currency in Russia. In February, the yuan surpassed the dollar in monthly trading volume for the first time, and the difference became more clear in March. Before the invasion, the yuan’s trading volume on the Russian market was negligible.
The switch comes after additional sanctions this year affected the few banks in Russia that retained the ability to make cross-border transfers in dollars and other currencies of countries branded ‘unfriendly’ by the Russian government. Raiffeisen Bank International AG, whose Russian branch remains one of the main conduits for international payments in the country, was among lenders that came under elevated pressure from European and US authorities.
Russia has strengthened its ties with China since the 2022 invasion, prompted by a break in relations with the West. In March, Chinese President Xi Jinping made Moscow his first visit abroad after his reelection. He promised the Kremlin expanded cooperation in the areas of trade, investment, supply chains, mega projects, energy and hi-tech.
Source: livemint.com