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- Russia is now the fourth-largest user of the Chinese yuan — after Hong Kong, the UK, and Singapore.
- Swift reported that Russia was not even among the top 15 countries using yuan up to May.
- In October 2022, the Chinese Yuan was fifth in global payments.
Russia, which was denied access to the US dollar due to severe sanctions regarding the Ukraine invasion, is now a major user of the Chinese Yuan for trade.
Moscow is now the fourth-largest user of the Chinese currency — after Hong Kong, the UK, and Singapore, the interbank messaging system Swift said in a report published on November 16.
While Hong Kong, Singapore, the UK and Singapore have been the mainstays of trading with the Chinese currency’s currency, Russia’s addition is new. Russia didn’t even figure into the top 15 countries that used yuan up until May, according Swift.
According to Swift, Russia was responsible for 3.3% international payments made using the yuan in October. Hong Kong, a special administrative region of China, accounted for the lion’s share — that’s 72% — of payments in the currency, and the UK accounted for about 5.5% of total transactions.
Despite the recent surge in usage, the Chinese yuan was only the fifth most commonly used currency for global payments, accounting for 2.1% of the total pie — though up from 1.7% from October 2020.
The US dollar is still the dominant currency, with 42% global payments made via it in October 2022.
According to Reuters analysis, data released by Moscow Exchange also show deepening ties between Russia and China. In October, trade in the yuan/ruble pair averaged almost 9 billion yuan or $1.25 trillion each day, according to Reuters. They rarely crossed the 1 billion mark in a single week before.
Russia’s ballooning interest in the redback — a colloquial term for the yuan — follows hard-hitting sanctions against Moscow for invading Ukraine, which restricted Russian banks’ access to the Swift banking system. Nearly half of Russia’s foreign currency reserves — including cash and gold — have also been frozen.
Moscow has been looking at alternatives to the US-dominated Swift system for international trade. Rosneft, a Russian energy company, has also issued bonds in Chinese Yuan to raise funds.
This shift has seen the yuan’s share in Moscow’s Exchange’s official foreign-exchange market jump to about 40% to 45% now— up from under 1% at the beginning of 2022, Dmitry Piskulov, international projects head at the bourse’s foreign-exchange market department told Reuters. The October trade in the US dollar/ruble pair dropped by about 40% to around 40% during the same period.
These changes are creating structural changes within the Russian economy. Elvira Nabiullina, the governor of the central bank, told lawmakers in November that the influx of yuan into the country’s economy typifies a “transformation in the currency composition of the economy,” according to Reuters.
Business Insider’s original article is available here
