Russia – China give up USD, ruble – yuan transactions increase by 1,000%

Russia and China is continuing to remove the dollar from bilateral trade transactions. The monthly trading volume between the ruble and the yuan has increased 1.067% to nearly $4 billion in the past three months.

Around 25.91 billion yuan, or $3.9 billion, was converted into rubles on the Moscow Exchange’s spot market in May, marking a 12-fold increase, according to Bloomberg calculations. with the volume recorded in February, when Russia launched a military operation in Ukraine.

The increase coincided with a rally in the ruble to a five-year high against the yuan and the dollar.

Meanwhile, trading volume in USD – rubles has fallen to the lowest level in a decade. The ruble rallied 118% against the greenback from early March to late May, even as most traders abandoned the pair amid capital controls and forced selling USD.

“The main players in the ruble-yuan market are corporations and banks, but there is also growing interest from retail investors” – currency and rate strategist at Sberbank CIB, Yuri Popov, told Bloomberg.

“Volume on the spot market of the Moscow Exchange has increased. This is due to concerns about sanctions, as well as the intention of Russia and China to encourage the use of national currencies in bilateral trade,” Popov added.

The massive departure of international brands from Russia when the country was sanctioned by the West forced Russian businesses to switch to using Chinese goods to replace Western imports.

At the same time, copper yuan China’s economy could gain new impetus for internationalization as growing tensions between Washington and Beijing slow it down.