Russian Foreign Exchange Trading RMB Share Reaches a New High

The share of the Chinese yuan in Russian foreign currency is increasing, and in March, the Chinese yuan's share in Russian foreign currency transactions reached a new high. Both the Russian government, financial institutions, and the public place greater emphasis on the renminbi, and the demand for it is constantly increasing. With the continuous deepening of practical cooperation between China and Russia, the RMB will play a more important role in the economic ties between the two countries.
Recently, the Russian Central Bank released a risk review report on the Russian financial market for March, stating that the RMB's share of foreign exchange transactions in Russia reached a new high in March. The trading share between the Chinese yuan and ruble in the Russian foreign exchange market is 39%. Reality shows that the renminbi is playing an increasingly important role in the development of Russia's economy and the economic and trade ties between China and Russia.
Firstly, the government places greater emphasis on the Chinese yuan. The Russian Ministry of Finance has been trading in the Chinese yuan market since 2022. The Russian State Welfare Fund also has a high proportion of funds stored in RMB to avoid the risk of Russian assets being frozen due to sanctions against Russia. In a recent interview, Russian Finance Minister Silvanov stated that it is not ruled out that the national welfare fund may be replenished with the Chinese yuan in the future. In addition, the Central Bank of Russia has been publishing the official RMB exchange rate on its official website since December 1st last year, previously only the US dollar and euro exchange rates.
Secondly, the market is more optimistic about the yuan. To facilitate transactions, several Russian banks have joined the RMB Cross border Payment System (CIPS). According to the Russian newspaper Businessman, Russia's NBD-Bank has joined the RMB cross-border payment system. After joining CIPS, the processing time of NBD-Bank's cross-border RMB business in China will be shortened, the settlement speed will be accelerated, and the service quality provided by the bank for customers engaged in Russia China trade activities will also be improved. According to incomplete statistics, there are currently nearly 20 Russian banks that can provide RMB remittance services, and about 50 credit institutions that provide RMB deposit services. The renminbi is becoming a "hot spot" in Russian financial institutions and markets, and there are even reports that the Russian financial market is facing a shortage of renminbi.
Once again, the public trusts the yuan more. Data shows that the Chinese yuan purchased by Russians in March reached a record high of 41.9 billion rubles, almost doubling from February's 11.6 billion rubles. There are predictions that by the end of 2023, the trading volume of the Chinese yuan in the Russian financial market may exceed the total trading volume of the US dollar and euro. Russian experts say that Russians who have become accustomed to dispersing savings will adapt to financial adjustments and convert some of their funds into Chinese yuan and other currencies of friendly countries with Russia.
With the continuous deepening of practical cooperation between China and Russia, the RMB will play a more important role in the economic ties between the two countries.   Although the changes are small, the significance is extraordinary. The First Vice President of Bank of Russia, Kshenia Yutayeva, previously pointed out that the share of the Chinese yuan in Russian foreign currencies is increasing, first due to the transition from foreign trade to RMB settlement, and second due to the growing demand for the Chinese yuan as a currency for citizen and corporate deposits and corporate loans.
  Steadily increasing the proportion of local currency settlement to meet market demand in bilateral trade, investment, loans, and other economic and trade exchanges. The latest data released by the General Administration of Customs of China shows that the trade volume between China and Russia in the first quarter of 2023 was 53.846 billion US dollars, a year-on-year increase of 38.7%. Among them, China's exports to Russia reached 24.074 billion US dollars, a year-on-year increase of 47.1%; The import reached 29.772 billion US dollars, a year-on-year increase of 32.6%. Guided by development plans and supported by rapidly growing bilateral trade between China and Russia, the RMB will play a greater role in deepening economic ties between the two countries. (Li Chunhui Source: Economic Daily)