In a significant shift, China’s yuan has surpassed the U.S. dollar as the most traded foreign currency in Russia. This development is a part of the ongoing trend of de-dollarization, reflecting a global move away from the dollar.
What Happened: The Renminbi accounted for 42% of all foreign currency trades on the Moscow Exchange in 2023, reported Business Insider on Thursday. This marks a significant increase from the previous year. The dollar’s share, on the other hand, dropped to 39.5%, down from over 63% in 2022.
The volume of yuan traded tripled to 34.15 trillion rubles ($385 billion) over the year, while dollar trading volumes fell by over a third to 49.90 trillion rubles ($560 billion).
The shift towards de-dollarization has been accelerated by the heavy sanctions imposed on Russia by the West following its invasion of Ukraine in 2022. This has led to a significant reduction in the use of the dollar and euro in Russia.
China, India, and Iran have also been actively promoting the use of non-dollar currencies in their trade transactions and international loans as a means to reduce the influence of Western economies on their own.
Why It Matters: This development is a continuation of a trend that began in 2023. The yuan overtook the dollar as the most traded currency in Russia just a year after the Ukraine war led to a series of Western sanctions against Moscow. The yuan’s trading volume on the Russian market was previously negligible.
Despite these developments, the global dominance of the U.S. dollar is seen as secure by some analysts. Bank of America Securities argues that the U.S. dollar’s global role is not under threat, as no single alternative has appeared.
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