The Russian Central Bank attributed the ruble’s latest plunge against the US dollar to a temporary decline in “sales of foreign currency denominated earnings by exporters.” The central bank also revealed that the Chinese yuan accounts for 39% of the total volume of transactions on the Russian forex market.
temporary reduction in foreign exchange sales
The Russian Central Bank announced that the ruble’s sharp decline to its lowest level against the U.S. dollar in 2023 was due to a decline in forex sales by domestic exporters. The central bank’s comments follow media reports attributing the ruble’s sharp decline (over 80 units to the dollar) to declining oil revenues and the impact of Western sanctions on the Russian economy.
Although it finished 2022 as one of the best performing currencies in the world, the Russian ruble has fallen more than 10% against the US dollar in 2023 and about 5% in the first week of April. However, in a monitoring report released on April 10, the Russian Central Bank asserted that the ruble’s decline may be temporary.
“A temporary decline in the sale of foreign currency denominated earnings by exporters led to the acceleration of the ruble’s depreciation in early April,” the central bank reportedly said.
However, the central bank claims that individuals and businesses have since responded to the currency’s depreciation by increasing their foreign currency sales.
Russian interest in the yuan has surged
Meanwhile, the central bank also revealed that interest in the Chinese currency, the yuan, surged after Russians purchased $515 million worth of yuan in March. Prior to that, Russians had purchased just over $143 million worth of Chinese currency in the previous month. In addition, yuan trading on the Russian foreign exchange market reportedly accounted for 39% of total trading volume. In contrast, ruble-dollar transactions accounted for only 34% of the volume.
Since Western sanctions and the exclusion of several banks from the Society for Worldwide Interbank Financial Telecommunication (SWIFT) financial communications network, the Russian government has been advocating alternatives to the US-dominated financial system has been advocating for an alternative to the U.S.-dominated financial system. Russia has also sought to reduce its dependence on the U.S. dollar by signing bilateral currency agreements with China, India, and other countries.
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