BREAKING

Russia turns to Asia as West sanctions its financial market

By Al Mayadeen English
Source: Agencies
1 Dec 2022 13:39
3 Shares

Russia announced that it will embrace the Yuan in exchanges with China as anti-Russia sanctions become increasingly threatening to Russian banks.

Russia embraces Yuan in China trade deals (Getty Images)

Russia embracing the Chinese yuan has had an effect on several Chinese entrepreneurs, as Russian businesses might now negotiate contracts in yuan rather than the dollar or euro. This is, according to Chinese entrepreneur Wang Min, an exciting "win-win" situation for Chinese and Russian businesses.

The businessman said, "We hope that next year sales in Russia can account for 10-15% of our total sales."

According to Reuters, Wang intended to profit from Russia's speedily "yuanized" economy, as the sanctioned nation looks toward an Asian market for financial stability. He envisions a win-win situation where Chinese exporters lower their currency risks and Russian purchasers have easier access to payment.

To put it simply, the Russia's economic shift toward the east might increase international trade, provide a rising economic counterbalance to the dollar, and curtail Western attempts to exert economic pressure on Moscow.

Last month, according to exchange data reviewed by Reuters, total transactions in the yuan-ruble pair on the Moscow Exchange soared to an average of about 9 billion yuan ($1.25 billion) per day. In the past, they seldom made more than 1 billion yuan in a single week.

According to Andrei Akopian, managing director of Moscow-based investment firm Caderus Capital, "What happened was that it suddenly became very risky and expensive to keep traditional currencies - dollar, euro, British pounds," referencing the potential sanctions risk of a bank that continued to hold foreign currency deposits.

Akopian argued that "everybody was motivated and even pushed towards the ruble or other currencies including, and first of all, the renminbi."

Furthermore, Reuters noted that exchange data showed that the yuan-ruble trade reached a total of 185 billion yuan in October, which is more than 80 times the number in February of 2022 when the war in Ukraine started.