According to the Germany-based Carnegie Russia-Eurasia Center, the recent US sanctions against Russia are expected to strengthen the role of the Chinese yuan as the main currency in Russian trade. Carnegie employee Alexandra Prokopenko noted that while the dominance of the US dollar remains undisputed, the fragmentation of the global financial system is now irreversible. The recent restrictions are targeted at Russia’s financial infrastructure, including the Moscow Stock Exchange, which subsequently halted the exchange of dollars and euros, complicating Russians’ access to Western currencies and potentially leading to different exchange rates for the ruble. Prokopenko believes that these measures will solidify the yuan’s position as the main currency for trade and settlements in Russia. As of May, the Chinese currency accounted for 53.6% of stock exchange trading and 39.2% of the off-exchange market in Russia. Prokopenko believes that it is precisely because of this that the new sanctions will strengthen the dominant position of the yuan on financial exchanges in Russia. Despite threats of secondary sanctions against foreign institutions maintaining financial ties with Russia, Prokopenko argues that the role of the yuan in Russian trade is unlikely to diminish. The sanctions are expected to increase ruble volatility and complicate its use in foreign trade, further encouraging the transition to the Chinese currency. This change is part of a broader trend of de-dollarization in the global economy. Last year, JPMorgan strategists and Morgan Stanley analysts noted the increasing influence of digital assets and central bank digital currencies (CBDCs) as factors contributing to the reduction of the dollar’s share in global currency reserves.
Intensifying Conflict between Russia and the United States Fuels Strengthening of Renminbi 