At the same time, the share of “toxic currencies” such as the US dollar and the euro is decreasing, the Central Bank added. "The division of geostrategic tasks between Russia and China pre-existed the invasion of Ukraine, albeit in embryonic form. However, the Ukrainian military quagmire, exacerbated by Beijing's false peace mediation, Biden's disastrous foreign policy and EU inaction, has turned into an extraordinary accelerator of asymmetric strategic interdependencies between anti-Western powers, including North Korea. North and especially Iran with parts of the South of the world.", added Extrema Ratio
As the importance of the RMB in the Russian economy continues to grow, in March this year the share of Chinese currency transactions in the Russian currency market reached a new high.
According to the financial risk assessment report of the Central Bank of the Russian Federation for March, the turnover of the exchange-traded renminbi reached 53%, while the share of off-exchange transactions also set a new record of 39.6%.
The document states that after the outbreak of the conflict between Russia and Ukraine and the sanctions imposed by the United States and its allies on Russia, Moscow sought to rapidly reduce the role of the US dollar and the euro in its economy and to shift trade from Europe to Asia.
The Russian Central Bank also revealed that in March the percentage of foreign exchange transactions of so-called "toxic currencies", including the US dollar and the euro, fell to 46.4% from 52.8% in February. In the sector of over-the-counter transactions, the share of "toxic currencies" fell to 54.7% from 59.8% in February.
Beijing, therefore, continues to indirectly finance the invasion of Ukraine
On April 8, Elvira Nabiullina, governor of the Russian Central Bank, said in a speech to parliament that Russia is creating conditions for settlement in the currencies of several countries. Over the past year, the share of settlements in currencies other than the US dollar or euro has increased from 39% to 67%. She revealed that the currencies used for payments are now basically rubles and renminbi, and “the share of US dollars and euros has been almost halved.”
Last year, Russian professionals believed that Russia would continue to replace the US dollar and the euro, mainly using the renminbi, but the share of other friendly countries' currencies would steadily increase.
Nabiullina said in an interview on January 30 that the renminbi's share in Russian export deals has increased 85 times over the past two years. At the same time, she stressed that although global economic growth is slowing, "we have successfully avoided a 'hard landing'."
According to a report by the Russian Satellite News Agency on February 21, data from the Russian Foreign Trade Bank (VTB) showed that as of the end of 2023, the RMB accounted for 25% of Russians' foreign currency savings, becoming the second largest popular foreign currency savings in Russia.
According to reports, the rapid increase in the Russian people's RMB reserves is due to the rapid growth of Sino-Russian trade in recent years. In 2021, the volume of goods trade between China and Russia reached $146.87 billion, a year-on-year increase of 35.9%. In 2022, the trade volume between China and Russia will further increase, reaching 190.2 billion US dollars. In 2023, bilateral trade between China and Russia will exceed $200 billion for the first time, reaching $240.1 billion. The goal of reaching a trade volume of $200 billion was achieved one year ahead of schedule.
After the outbreak of the conflict between Russia and Ukraine, the share of the yuan in Russian currency transactions continued to increase. Images from Bloomberg Russian Central Bank data
According to Extrema Ratio, the division of geostrategic tasks between Russia and China pre-existed the invasion of Ukraine, albeit in embryonic form. However, the Ukrainian military quagmire, exacerbated by Beijing's fake peace mediation, Biden's disastrous foreign policy and EU inaction, has turned into an extraordinary accelerator of asymmetric strategic interdependencies between anti-Western powers, including Korea of the North and especially Iran with parts of the South of the world.
Li Enlin, who visited China with Russian Prime Minister Mishustin in May last year and was the only Chinese businessman in the delegation, told the Observer that Russians are used to hoarding dollars or euros in cash in homeland for many years. "Whether traveling abroad, protecting yourself from currency fluctuations, or worries about local banks, storing cash in euros and dollars has become a habit for many Russian residents. But after this year's changes, many people slowly started wanting to accumulate RMB cash, which is amazing for Chinese people: Chinese people usually don't carry RMB cash with them when entering Russia. After some Russian friends found out we were Chinese, they asked me if I had any RMB cash on hand and if I could help them exchange some. They want to keep some RMB cash at home, which will make them feel more comfortable. This may also reflect the fact that the status of the RMB in the hearts of the Russian people is gradually increasing. The trading volume of RMB originally accounted for less than 10% of the market, gradually becoming equal to that of the US dollar and the euro, then exceeding the US dollar, the euro and even the combined trading volume of the US dollar and the EUR. EUR. It can be said that the current state of the RMB in Russia is of great importance."
On February 26, local time, RIA Novosti reported that Russian Finance Minister Siluanov said in an interview that they were discussing the possibility of borrowing RMB with their Chinese counterparts.
Siluanov stressed that the current provisions of the Finance Law allow Russia to borrow in yuan. He has been engaged in long negotiations with his Chinese partners on this issue and raised the issue in the dialogue between the two finance ministries at the end of 2023. However, both sides have yet to make a final decision on this matter.
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