In the aftermath of international sanctions, Russia’s central bank is becoming increasingly reliant on the Chinese yuan as a key reserve currency.
According to a Bloomberg report dated March 29th, the yuan has become a more enticing option due to the scarcity of alternatives and limits imposed by other currencies.
The report highlights how Russia’s economic landscape has changed substantially since the conflict in Ukraine. Faced with Western sanctions, Russia has improved contacts with China, particularly in trade. When combined with increasing government spending, this has helped Russia weather the economic storm.
Notably, the yuan has eclipsed the US dollar as Russia’s most traded currency, demonstrating its growing popularity. The Russian Central Bank refutes accusations that Western sanctions have frozen $300 billion of its $590.1 billion in reserves.
Despite the hurdles, Russia’s reserves increased little in 2023 as gold prices rose. However, the bank has been reticent about the specific makeup of its reserves, refusing to reveal anything other than the foreign currency-to-gold ratio.
