The Russian central bank has pointed to the temporary diminishment of “sales of foreign currency earnings by exporters” as the cause behind the ruble’s recent slump against the U.S. dollar. The bank further revealed that Chinese yuan now accounts for almost 40% of the volumes traded on the Russian forex market.
Lower Exports of Foreign Currency
The Russian central bank has pointed to a decrease in the sales of foreign currency earnings by exporters as the cause behind the ruble’s latest fall towards the U.S. dollar. The central bank’s statement followed reports which attributed the ruble’s plunge (to more than 80 units for every dollar) to reduced oil revenues and the impact of Western sanctions on the Russian economy.
Though it ended 2022 as one of the world’s best-performing currencies, the Russian ruble has depreciated by more than 10% versus the U.S. dollar in 2023, and by about 5% in the opening week of April. However, the Russian central bank argued that the ruble’s current slump may be transitory, in its report which was released on April 10.
“There has been a temporary reduction in sales of foreign currency earnings by exporters, which led to an acceleration of the weakening of the ruble in early April,” the central bank said.
The central bank claimed that individuals and companies have since responded to the currency’s fall by increasing sales of foreign currency.
Chinese Yuan’s Popularity on Russian Forex Market
The central bank also noted that the Chinese currency — the yuan — saw a surge in interest in March, after Russians purchased $515 million worth of yuan. Before that, Russians had bought Chinese currency valued at just over $143 million in the preceding month. Additionally, trades on the Russian forex market that involved yuan reportedly accounted for 39% of total volumes. In comparison, ruble-dollar trades only accounted for 34% of the volume.
Since the imposition of Western sanctions and the removal of several banks from the Society for Worldwide Interbank Financial Telecommunication (SWIFT) financial communications networks, the Russian government has pushed for an alternative to the U.S.-dominated financial system. In this regard, Russia has sought to reduce its reliance on the U.S. dollar by establishing bilateral currency agreements with countries such as China and India.
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