RUSSIAN Ruble Replaced as Russian Payments, Bonds & Loans in Yuan Soar & More Countries Pay in Yuan

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July 14, 2024

Video Summary

Russia’s economy is undergoing a significant shift, with the Chinese yuan becoming increasingly important in international trade. Amidst the economic sanctions imposed on Russia following its invasion of Ukraine, Moscow has had to pivot and adapt its trading partners, with China emerging as a major player. This shift has led to a significant decline in the value of the Russian ruble, as the country’s main trading partners, including China and India, increasingly prefer to deal in yuan rather than rubles.

China’s growing presence in the Russian economy is evident in the massive increase in the value of Russian exports to China, with the figure more than doubling since 2019. Additionally, Russia’s companies are now taking out loans and making deposits in yuan, with a significant increase in daily trading on Moscow’s exchange market. This trend has significant implications for the Russian economy, as it becomes more dependent on the yuan and less on the ruble.

The Russian Central Bank is struggling to control inflation, which has risen from 3.3% to over 8% in the past year, despite hiking interest rates from 7.5% to 16%. This is because many Russian companies are now borrowing in yuan and making deposits in yuan, rather than rubles, making interest rate increases less effective in controlling inflation.

The rise of the yuan also poses a liquidity crisis for Russia, as the country is finding it difficult to access sufficient supplies of the currency. This could lead to major problems in the Russian economy, including inflation and a loss of control over the financial system. Overall, the shift towards the yuan has significant implications for the Russian economy, and could lead to a major economic crisis if not managed carefully.