Yuan-ruble trading volume surged to a six-month high in China last month as Chinese exports to Russia ramped up.
Spot trading between the two currencies rose to 321 million yuan, or $48 million, in the interbank market, according to June data from the China Foreign Exchange Trade System cited by Bloomberg.
In May, Chinese exports to Russia jumped 14% as Moscow sought alternatives for goods blocked by Western sanctions that were imposed after President Vladimir Putin launched a war on Ukraine.
More shipments means local exporters must settle more receipts in rubles, which tends to lift trading of the currency pair.
“The rebound in the trading volume could be related to the warming up of China-Russia cargo trade,” a strategist at Scotiabank told Bloomberg.
China reopening its economy from COVID-19 lockdowns caused business and financial activity to increase, and shipments also may have risen due to an easing of supply-chain snags. Onshore dollar-yuan spot trading also rebounded in June.
Meanwhile, China has continued to move to elevate its currency on the world stage to challenge the US dollar’s dominance.
Earlier this week, the People’s Bank of China announced it was developing a yuan reserve with five nations and the Bank for International Settlements. The move is meant to present an alternative to the dollar-heavy International Monetary Fund.
But Russia, too, has made moves to the benefit of the yuan. India’s top cement producer is paying for Russian goods in yuan, according to a Reuters report, and traders say similar deals will follow.
“This move is significant,” a currency trader told Reuters. “I have never heard any Indian entity paying in yuan for international trade in the last 25 years of my career. This is basically circumventing the USD.”
On Friday, spot trading for China’s Renminbi hovered just above 6.70, up 5.44% year to date.