The Russian central bank has attributed the latest fall in the ruble against the US dollar to the temporary reduction “in the sales of foreign currency earnings by exporters”. The central bank also revealed that the Chinese yuan accounted for 39% of the total volume of the Russian forex market.
Temporary Reduction in Foreign Currency Sale
Russia’s central bank has said the ruble’s recent slide to its lowest level against the US dollar in 2023 is due to weaker foreign exchange sales by the country’s exporters. The central bank’s comments followed media reports that attributed the ruble’s plunge (to more than 80 units to the dollar) to reduced oil revenues and the impact of Western sanctions on the Russian economy.
Although it ended 2022 as one of the best performing currencies in the world, the Russian ruble has depreciated more than 10% against the US dollar in 2023 and around 5% in the first week of April. However, in its monitoring report released on April 10, the Russian central bank insisted that the ruble’s latest decline may be temporary.
“There has been a temporary reduction in foreign exchange sales by exporters, which led to an acceleration of the weakening of the ruble in early April,” the central bank said.
The central bank claimed, however, that individuals and businesses have since responded to the currency’s decline by increasing foreign currency sales.
Russian interest in the Chinese yuan rises
Meanwhile, the central bank also revealed that interest in China’s currency, the yuan, spiked in March after the Russians bought $515 million worth of yuan. Before that, the Russians had bought Chinese currency worth just over $143 million the previous month. Furthermore, transactions on the Russian foreign exchange market involving the yuan reportedly accounted for 39% of the total volumes. On the other hand, ruble-dollar transactions only accounted for 34% of the volume.
Since the imposition of Western sanctions, as well as the removal of several banks from the Society for Worldwide Interbank Financial Telecommunication (SWIFT) financial communications networks, the Russian government has advocated an alternative to the US-dominated financial system. Russia has also tried to lessen its dependence on the US dollar by establishing bilateral currency agreements with countries such as China and India.
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