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Moscow adopted the yuan’s exchange rate against the ruble as a benchmark after the US expanded sanctions against it.
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US sanctions forced the Moscow Exchange to close trading in the dollar and euro, causing confusion in the market.
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Russia’s central bank reports that the yuan is now the main currency, accounting for 54% of trading.
Moscow is adopting the Chinese yuan/ruble exchange rate as its reference currency pair, after the US increased sanctions against Russia on Wednesday, the country’s central bank said on Thursday.
The new restrictions target any global financial institution that processes transactions with Russia. They also target investments on Russian stock exchanges.
New US sanctions have led to Moscow Stock Exchange end dollar and euro trading on Thursday, causing confusion – as the the exchange rate is now opaque. Some lenders in Russia have stopped selling US dollars altogether, while the dollar-ruble rate has soared at some local banks.
Russia’s central bank appeared to try to calm the market in a statement released on Thursday. He said the role of the dollar and euro has declined “consistently” over the past two years, according to TASS, the state news agency.
O central bank added in its statement told Russia’s RBC News that the yuan has become “the main currency” on the Moscow Exchange. The yuan accounted for 54% of foreign exchange trading in May. This will “set the trajectory for other currency pairs” and will be the guideline for market participants, the central bank said.
Russia’s use of ‘friendly currencies’ and the ruble for trade has increased
Russia has sought alternative trading partners It is payment systems since the West hit the country with sweeping sanctions following its invasion of Ukraine in February 2022.
Russia’s central bank said on Thursday that the currencies of “friendly countries” and the ruble now account for up to 80% of Russia’s foreign trade payments.
Russian leader Vladimir Putin himself redoubled his call to phase out the use of the US dollar and other “toxic” currencies earlier this month.
Moscow is also working with the BRICS Block of major emerging countries on a payment platform to bypass the use of the US dollar – the world’s dominant reserve currency for decades.
Meanwhile, countries around the world are also diversifying their assets and reducing dominion of the dollar king due to fears that – like Russia – they could be excluded from the dollar-based global financial system if sanctions were imposed.
However, the dollar is so entrenched and widespread that very few actually think he can be dethroned.
Read the original article at Business Insider
