China's yuan has reportedly taken over the position held by the U.S. dollar as the most traded currency in Vladimir Putin-led Russia, a year after the Ukraine war led to a slew of Western sanctions against Moscow.
The yuan surpassed the dollar in monthly trading volume in February for the first time, and the difference became more pronounced last month, reported Bloomberg based on daily transaction reports from the Moscow Exchange.
Before the invasion, the yuan's trading volume on the Russian market was negligible.
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Last August, Russia has become the third-largest market for yuan transactions outside the Chinese mainland in the wake of Western sanctions.
The yuan's dominant position follows additional sanctions this year that affected the few banks in Russia which could make cross-border transfers in dollars and other currencies of nations that were branded "unfriendly" by Russia, the report said.
Raiffeisen Bank International AG was among the banks that came under increasing pressure from European and U.S. authorities, the report said.
Expert Take: Iskander Lutsko, a strategist at ITI London said there are fewer dollars on the market as Russia's revenues declined due to the oil-price drop and a decrease in exports, according to the report. He added that "commodity imports from Russia to China are up by 29%, although exports from China are stagnating."
Russia has strengthened its ties with China since the Ukraine invasion last year which prompted tensions with the West. Chinese President Xi Jinping made Moscow his first visit abroad after his re-election, the report said.
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