Russia don largely abandon di plan to use Chinese yuan replace United States dollar for international trade, as pressure from American secondary sanctions make di arrangement hard to sustain. Data from Russian central bank wey Bloomberg report shows say yuan share of payments for Russian exports don fall by half from mid-2024 peak to 22 percent in 2026, even though trade between Moscow and Beijing still dey grow.
Di shift na big setback for President Vladimir Putin campaign to reduce Russia dependence on dollar. After Russia invade Ukraine for February 2022 and Western sanctions block access to global financial system, Moscow move sharply towards yuan. By 2024, Chinese currency account for nearly half of Russia foreign trade settlements, become most traded currency on Moscow Exchange and overtake dollar for bank deposits.
But di numbers don turn. Russia now collect 69 percent of export payments from Asian countries in rubles, according to di report. That one mark strong movement away from yuan, even as some payment channels to China still dey operate. Di report talk say those channels no guarantee say transaction go complete, and many deals now pass through intermediaries instead of direct bank payments.
United States expand secondary sanctions on June 12, 2024, targeting foreign banks wey dey deal with sanctioned Russian entities. Under di measures, foreign banks risk losing access to United States banking accounts and dollar payment channels if dem help transactions involving sanctioned Russian institutions. United States also sanction Moscow Exchange, forcing am to suspend dollar and euro trading. Chinese banks also restrict Russian payments to protect their own access to United States financial system.
Sergei Ishkov, partner for consulting firm MCK Partners, tell Russian newspaper Kommersant say Chinese banks risk losing their American correspondent banking relationships if dem continue processing payments for sanctioned Russian institutions. “This, of course, is a gigantic loss,” Ishkov talk, explaining say di possible consequences pass di benefit of doing business with Russia.
Putin don push alternatives to dollar through BRICS, with support from China, Brazil and South Africa, plus newer African members Egypt and Ethiopia, while Nigeria and Uganda join as partners. But members still divide over whether to replace dollar, and some prefer alternative payment systems instead. For October 2024 BRICS summit for Kazan, Putin accuse United States of using currency as political weapon. “The dollar is being used as a weapon. We really see that this is so,” e talk.
Di yuan share for global payments also return to pre-war level, according to di report. Russian businesses wey still need send payments to China turn to smaller regional Chinese banks and intermediaries wey get yuan liquidity inside China, but di arrangement no carry di same certainty like before.
