Chinese banks cut ties with Moscow exchange as yuan trading plummets
Chinese banks are severing ties with the Moscow Exchange due to sanctions. As a result, Russians will lack access to the currency currently used for 99% of cross-border transactions.
Bank of China disconnected the Moscow Exchange from the yuan, reports the daily.
"The volume of yuan trading on the Moscow Exchange has plummeted. In July, it averaged one-third less than in June and half of what it was in January," adds "Rzeczpospolita".
The Chinese currency has replaced the dollar
The Chinese yuan became the primary settlement currency in Russia when new sanctions imposed by the West on the Moscow Exchange came into effect in mid-June due to Vladimir Putin's military invasion of Ukraine. As a result, Russians lost easy access to dollars and euros.
The Kremlin's problem lies in the Russian financial system being chronically short of Chinese currency, as Mikhail Vasiliev, chief analyst at Sovcombank, stated to the Frank RG portal. Russian companies acquire the yuan mainly from trade, not Chinese banks.
In its June statement, the Bank of Russia emphasized that the role of the US dollar and the euro in the Russian market has consistently diminished over the past two years. This is the result of redirecting trade flows to the East and changing the settlement currency to rubles, yuan, and other currencies of countries friendly to Russia. According to data from the Russian central bank, in May, the yuan accounted for 54% of the trading volume on the Moscow Exchange, making it the primary currency in exchange trading.
