The Ministry of Economy has revealed the extent of "yuanization" of Russian trade excluding China.

The ruble has become Russia's primary currency for export payments, even to unfriendly countries. The yuan, meanwhile, is actively used in Russia's trade with countries other than China . The Ministry of Economic Development disclosed this information to RBC.

The currencies of friendly countries and the ruble have become dominant in Russia's foreign trade: their combined share of exports reached 72% in July 2023 (up from 15% at the beginning of 2022), while their share of imports increased to 69% over the same period (up from 33% at the beginning of 2022). The Ministry of Economic Development provided these figures in response to an inquiry from RBC. "These figures will continue to grow," the ministry believes.

"The Russian ruble is the main currency for export payments—its share has more than tripled this year, exceeding 40%," the Ministry of Economic Development reported. Moreover, Russia uses the ruble for payments to almost all counterparties, both friendly and unfriendly, they emphasized.

In September 2023, the Bank of Russia resumed publishing aggregated information on the structure of foreign exchange settlements in foreign trade in a modified format (it had been suspended in the spring of 2022). According to the Central Bank, in July, Russia received less than 28% of its export revenue in toxic currencies (compared to 87% in January 2022) and transferred less than 31% of its import revenue in these currencies (compared to 67% in January 2022).

According to the Central Bank, 49.5% of Russia's export revenues to Europe are currently in rubles, while almost 50% of payments for imports from Europe are in rubles.

Using the yuan

The most significant of the friendly currencies is the Chinese yuan. According to the Ministry of Economic Development, 75% of Russian-Chinese trade turnover was denominated in yuan in the first half of 2023. However, the yuan is also actively used in Russia's trade with third countries: 25% of trade with the rest of the world in the first half of the year was in yuan.

Furthermore, the average daily trading volume of the ruble/yuan currency pair in Russia has approached 200 billion rubles (a more than 100-fold increase since the beginning of 2022), and the issuance of yuan-denominated debt instruments on the Moscow Exchange has grown significantly—55 issues with a total volume of over 80 billion yuan are currently traded there, the Ministry of Economic Development added.

Read pionerprodukt.by The Afghani is the best currency of the quarter. How is this possible in a collapsed economy? Is the US facing an imminent collapse: what foreign experts say? The economics of poverty: why Russian employees will become poorer. The "Gopnik" exercise: how to make a speaker sound persuasive.

In March 2023, Russian President Vladimir Putin informed Chinese President Xi Jinping that he favored using the yuan in Russia's transactions with countries in Asia, Africa, and Latin America. In the summer, foreign media reported that a number of Indian and Pakistani importers were paying for Russian oil in yuan.

On September 27, the European Bank for Reconstruction and Development (EBRD) published a study by its economists based on "12 million import transaction records" from Russia. It found that in the second half of 2022, the yuan overtook the dollar in the value of invoices issued for imports of goods from China to Russia. "However, the yuan has also begun to be used in Russia's trade settlements with third countries, such as Mongolia, Taiwan, the Philippines, Malaysia, the UAE, Thailand, Japan , Tajikistan, and Singapore," the EBRD economists wrote. Even in occasional import transactions from the US, EU, and UK (1-2% of transaction volume), the yuan is used as the settlement currency, the EBRD noted.

The use of the yuan in settlements increases by an average of 4 percentage points in Russia's trade with countries that have active currency swap lines with the People's Bank of China (e.g., Mongolia and Tajikistan), according to EBRD authors. These swap lines facilitate the use of yuan received from Russian importers by exporters in these countries, they explain. As of 2022, the People's Bank of China had 38 bilateral swap lines totaling 4 trillion yuan (including with Hong Kong, South Korea, the European Central Bank, Singapore, Australia, Indonesia, etc.), according to the report "Use of the Renminbi in Cross-Border Payments," released in March 2023 under the auspices of the IMF .

Russia's growing reliance on the yuan is not without risks, foreign experts warned. If China's macroeconomic situation worsens, "financial contagion" to Russia could occur, wrote Oxford Analytica advisor Nuria Kapralu in the Japanese newspaper Nikkei in February 2023. Since the People's Bank of China actively manages the yuan's exchange rate, she believed that Russia's savings in this currency are vulnerable to Chinese intervention.

Other friendly currencies

In Russia's trade with India, Turkey, and the UAE, the respective currencies of these countries are used, but they account for only 5–15% of bilateral turnover, while in Russia's trade with third countries, such currencies are practically not used, the study states.

The EBRD's analysis illustrates that "geopolitical tensions and trade sanctions could reduce the attractiveness of the US dollar as a currency for international trade settlements," the authors conclude.

The use of other currencies of friendly states—the Turkish lira, the Indian rupee, the UAE dirham, and the South African rand—is also being actively encouraged, the Ministry of Economic Development stated. "A diversified basket of settlement currencies will help mitigate currency and transaction risks and increase the resilience of the Russian economy to sanctions pressure," they concluded.