Moscow is now the fourth largest offshore trading hub for the Chinese yuan, as sanctions spur Russia's dash to an alternative currency
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Russia, whose access to the US dollar was curtailed due to sweeping sanctions over the Ukraine invasion, has now become a big 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.
And while Hong Kong, the UK, and Singapore have been mainstays for trading with the Chinese currency, Russia's inclusion is new, as the country didn't even factor into the top 15 countries for yuan usage up till May, according to Swift.
In October, Russia accounted for 3.3% of international payments using the yuan, per Swift. 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 still dominates currency usage, as 42% of global payments were made via the greenback in October 2022.
Data released by the Moscow Exchange also shows deepening ties between China and Russia, with trade in the yuan-ruble pair averaging almost 9 billion yuan, or $1.25 billion, each day in October, according to an analysis from Reuters. Previously, they rarely overshot the 1 billion yuan mark in an entire week.
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
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