- The Chinese yuan topped the US dollar as the most traded currency in Russia during February and March, according to Bloomberg data.
- February marked the first month ever that the currencies flipped, and the trend became more pronounced in March.
- Before Russia invaded Ukraine, the Russian market saw barely any volumes in yuan trading.
China’s yuan has surpassed the US dollar as the most traded currency in Russia as Moscow continues to deepen political and economic ties with Beijing.
Trading volume for the yuan topped the dollar’s for the first time ever in February, Bloomberg transaction data show, and that disparity became more significant in March.
Prior to Russia’s invasion of Ukraine, the yuan saw minimal trade volume in Russian markets. Since March 2022, however, the amount has increased.
The uptick in yuan trading volumes comes as Western sanctions continue to weigh on the Russian economy, with some 2023 measures impacting the handful of Russian banks that could still make dollar-based transactions.
As for China, President Xi Jinping visited Moscow last month and engaged in talks to bolster the nations’ relationship in trade, investment, energy and technology.
The yuan accounted for about 2.7% of global foreign-exchange reserves at the end of 2022, IMF data showed. The dollar accounted for roughly 58%.
Notwithstanding the dollar’s prevalence on the world stage, the greenback is coming off a weaker month, and the dollar index could continue to lose ground, according to senior market analyst at FxPro, Alex Kuptsikevich.
“Although it cannot be ruled out that the quarterly portfolio shakeout will create traction in the dollar, it is still more likely that the US currency will fall further in the coming quarters,” Kuptsikevich said.