Reuters: Russia's economy is rapidly "yuanization"

November 29, 2022

Russia's financial shift to the East could stimulate cross-border trade, become a growing economic counterbalance to the dollar, and limit Western efforts to put pressure on Moscow economic means. This is reported by Reuters, which talks about the rapid "yuanization" of the Russian economy in 2022.

As the agency notes, the yuan has previously penetrated into Russia. However, over the past nine months, this penetration has turned into a sprint as the currency has flowed into the country's markets and trade flows within the country.

The total volume of transactions in the yuan-ruble pair on the Moscow Exchange last month rose to an average of almost 9 billion yuan ($1,25 billion) per day. This is evidenced by exchange data analyzed by Reuters. Previously, they rarely exceeded 1 billion yuan in a whole week. The surge in interest has seen the yuan's share of the foreign exchange market jump to 40-45% from less than 1% at the beginning of the year.

In comparison, the share of the dollar-ruble pair, which accounted for more than 80% of trading volumes in the Russian market in January, has fallen to about 40% as of October, according to data from the exchange and the Central Bank.

However, in general, there is no global benefit from the use of the yuan for Russian business and small investors. It acts only as a means of protection against the volatility of the ruble, and nothing more. Obviously, Chinese merchants and businesses receive the maximum benefit and profit. Of course, the Russian national financial regulator is well aware of all the dangers of "yuanization" of the economy, but so far is in no hurry to prevent or prohibit avalanche-like processes.

Photos used: pixabay.com

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Offline Jacques sekavar

Jacques sekavar (Jacques Sekavar) 29 November 2022 10: 50

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The blockade of the swift and the restriction of transactions in dollars, euros, pounds, leave the ruble no choice but to rely on the renminbi and the banknotes of underdeveloped state formations. The question is how they react to this, given their trade ties with the EU and the US. Aunt Yellen and Uncle Powell answered this question not so long ago in the sense that they do not see significant violations by the PRC of the sanctions imposed against the Russian Federation. It is understandable, the PRC has no reason to get involved in other people's showdowns and change the trade turnover of about 700 billion. with the US + 800bn. with the EU for 150 billion. with the prospect of 200 billion from the Russian Federation, and at the same time, the structure is of great importance - the basis of China's turnover with the Russian Federation is the import of raw materials and the export of consumer goods - cars, household appliances, etc., and with the USA and the EU - machinery and equipment.
The resourcefulness of the Central Bank and hopes for the dollar, renminbi and other national banknotes speaks of the low value of their own banknote and its dependence on others. An attempt to strengthen the banknote by paying for energy resources in rubles turned into a farce and no one answered for it, just as no one answered for the loss of 300 billion gold reserves, not to mention other “frozen” assets of the Russian Federation.
At one time, the USSR was in a much worse position, and over the 10 years of the first two five-year plans, it not only got out of the situation, but also became a force with which the entire enemy environment had to be reckoned with. Maybe there is something to learn from the ancestors, and not go dutifully to the slaughter about Western "partners", "colleagues" and "friends"?