China’s yuan has replaced the US dollar as the most traded currency in Russia. The development comes one year after Russia’s invasion of Ukraine resulted in several Western sanctions against Moscow.
According to the data by Bloomberg, the Chinese yuan replaced the US dollar in monthly trading volume for the first time in February. The trading volume event also rose on a higher scale in March.
Bloomberg compiled the data based on daily transaction reports from the Moscow Exchange. Before the invasion of Ukraine, the yuan’s trading volume on the Russian market was negligible. However, the yuan’s influence witnessed a sharp rise.
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 Kremlin.
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Sweeping sanctions targeting Russia’s financial system have forced the Kremlin and Russian companies to switch their foreign-trade transactions from the dollar and euro to currencies of countries that have declined to join any restrictions.
President Putin has also advocated for the global adoption of the Chinese currency, urging for its internationalization. Putin underscored the significant role that the yuan and the ruble play in facilitating trade between Russia and China.
Furthermore, the President expressed his support for employing the yuan as a currency of settlement in transactions between Russia and the nations of Asia, Africa, and Latin America.
🔥The world currency war has begun
🧨Chinese #Yuan against the #Dollar📢Russia's Putin declares to use RMB for foreign trade. pic.twitter.com/GUNKHTQmVz
— NFSC_HAGnews (@NFSC_HAGnews) March 28, 2023
Over the past few years, China has been working to promote the internationalization of its currency, the yuan, and increase its use in international trade and finance. Recently, Brazil has begun to accept trade settlements and investments in yuan, after an agreement reached between central banks in February.
However, it’s important to note that the US dollar still remains the dominant global reserve currency and is widely used in international trade and finance. The yuan’s internationalization is a gradual process that is still ongoing, and it may take some time before it can rival the US dollar’s dominant position in the global financial system.
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