The share of the Chinese yuan on the Moscow Stock Exchange (MOEX) hit a record high in March, the Bank of Russia (CBR) reported in a monthly financial market overview released on Monday.
The yuan accounted for 39% of total trading volume in major currencies, down from 37% in February, according to the CBR. Meanwhile, the dollar’s share fell to 34% from 36% the previous month. For comparison, the greenback’s share a year ago was 87.6%, while that of the yuan was only 0.32%.
“Market participants continued to reduce the volume of transactions in “toxic” currencies in foreign exchange operations,“, concluded the regulator. The dollar, along with the euro, was considered “toxic” because Western Ukraine-related sanctions against Russia jeopardized the use of these currencies in Russia’s transactions with foreign partners.
Prior to February, the yuan had never surpassed the dollar on the MOEX in terms of monthly trading volume. At the end of February, the volume of transactions on the ruble-yuan pair amounted to 1,490 billion rubles ($18.1 billion) against 1,430 billion dollars ($17.4 billion) on the dollar-ruble pair . In March, yuan turnover rose further to 2 trillion rubles ($24.3 billion), from 1.7 trillion rubles ($20.7 billion) in dollar transactions.
It was also noted that, unlike previous months, Russian citizens significantly increased the volume of purchases in yuan, from 11.6 billion rubles in February to 41.9 billion in March. Russian banks offer foreign currency accounts, while foreign currency can also be purchased through banks and exchange offices. Some Russians buy other currencies to hedge against ruble volatility.
Analysts say changes in yuan and dollar trading volumes reflect Russia’s abandonment of transactions in the currencies of so-called “unfriendly” countries amid sanctions. The restrictions include the blacklisting of a number of Russian banks and their removal from the SWIFT interbank messaging system, as well as bans on transactions with Russian financial entities and the freezing of foreign exchange reserves. In February, Finance Minister Anton Siluanov said the country no longer trusted the US currency, calling it “a totally unreliable instrument.”
More recently, in late March, Russian President Vladimir Putin said the country would have continued to use the dollar, but sanctions forced it to de-dollarize.
“We would use dollars, but they won’t allow us to, so how do we make payments? In a currency acceptable to our business partners. The yuan is one such currency, especially since it is also used by the International Monetary Fundsaid the Russian president.
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