Yuan Surpasses Dollar: Top Traded Currency in Russia on BRICS

• The Chinese Yuan Surges as the Leading Currency in Russia's Trade
• US Sanctions and the Rise of the Chinese Yuan
• Effects on US Sectors as BRICS Considers Transition from Dollar
• The Chinese Yuan Tops the List of Most Traded Currencies in Russia
• Trade Volume between China and Russia Expands
• De-Dollarization Strategies in BRICS Nations

The Chinese Yuan Surges as the Leading Currency in Russia's Trade

In a significant development, the Chinese Yuan has surpassed the US dollar to become the most traded currency in Russia, marking a 2.5% increase. This shift in currency preference comes as part of a broader economic strategy between the BRICS nations, specifically China and Russia, who started trade settlements in the Chinese Yuan as of February 2022. This move effectively ended their dependency on the US dollar.

US Sanctions and the Rise of the Chinese Yuan

The stringent sanctions invoked against Russia by the US, due to the former's invasion of Ukraine, made usual trade in dollars increasingly challenging for Russia. China, seizing the opportunity, promoted the use of the Chinese Yuan for settling cross-border transactions, thereby further diminishing the role of the US dollar.

The sanctions against Russia have inadvertently led to the Chinese Yuan becoming the de facto currency for trade within the country. As a BRICS member, China has influenced Russia to limit the acceptance of US dollars for trade and exclusively accept the Chinese Yuan. This tactic aligns perfectly with the idea of de-dollarization, a concept initiated by the BRICS alliance.

Effects on US Sectors as BRICS Considers Transition from Dollar

Interested parties can follow this development closer to understand how many sectors in the US may be impacted if the BRICS nations decide to abandon the dollar for trade.

The Chinese Yuan Tops the List of Most Traded Currencies in Russia

The Chinese Yuan accounted for 42% of all international transactions initiated in Russia from 2023 to January 2024. In comparison, the US dollar made up 39.5% of all cross-border settlements by Russia during the same time frame. This 2.5% decrease in dollar transactions led to the Chinese Yuan becoming Russia's most used currency in 2023-24.

Trade Volume between China and Russia Expands

The sanctions led to a surge in the trading volume of the Yuan with Russia, which tripled to reach $385 billion in trade in a year. Concurrently, the trade volume of the US dollar in Russia reached $560 billion in the same period. While the US dollar remains in competition, it lags behind the Chinese Yuan.

De-Dollarization Strategies in BRICS Nations

Russia and China, as leading countries in the BRICS alliance, are increasingly using the Chinese Yuan over the US dollar. The two nations remain intent on advancing their de-dollarization strategies with the aim of bolstering local currencies and reducing dependence on the US dollar.

Edited by Jonathan Stoker