Russia embraces China’s Renminbi in face of western sanctions

  • Russia has adopted the renminbi as one of the main currencies for its international reserves, overseas trade and even some personal banking services as it pivots towards China in the face of western sanctions.
  • The shift has made Russia a rare example of a country adopting the renminbi rather than the US dollar or euro as a reserve currency, but poses risks for Moscow given Beijing’s history of abrupt currency devaluations.
  • China’s desire for international adoption of the renminbi has gone largely unfulfilled, but Russia has been driven towards the Chinese currency by international sanctions, the freezing of $300bn of its international assets and moves to exclude its main banks from global markets.
  • Russia was the fourth-largest economy, excluding Hong Kong, for volumes of renminbi trading in Feb 23, according to data from the Swift global payments system. It did not feature in the top 15 before Russia’s full-scale invasion of Ukraine.
  • The rise of renminbi trading mirrored Russia’s economic pivot to China, as bilateral trade hit a record of USD185bn in 2022. Russian companies pay for most purchases of Chinese goods in renminbi — purchases that increased sharply after the invasion.
  • Russian president Vladimir Putin this month endorsed the broader international use of the renminbi. He said as he met with Chinese president Xi Jinping that he supported “the use of the yuan in payments between Russia and countries of Asia, Africa, and Latin America”.

External Link :