The Russian rouble climbed to 10.45 against China’s yuan on the Moscow Exchange on Tuesday, marking its strongest showing versus the yuan since February 2023. The move coincides with the yuan becoming Russia’s most actively traded foreign currency.
Data from LSEG also shows the rouble moved to the stronger side of the 72 level against the U.S. dollar on Tuesday, its first time below that mark since March 2023.
Officials point to a shift in settlement patterns in bilateral trade as part of the backdrop for the currency’s gains. Kremlin foreign policy aide Yuri Ushakov said that nearly all payments in the roughly $240 billion trade between Russia and China are now settled in yuan and rouble.
The currency’s appreciation comes ahead of a state visit by President Vladimir Putin to China, during which a series of business arrangements are expected to be discussed. Putin and Chinese leader Xi Jinping are due to talk about new energy arrangements, including the Power of Siberia 2 gas pipeline project that would move gas from the Yamal Peninsula in West Siberia to China.
Market observers cited several factors supporting the rouble. Elevated oil prices linked to the conflict in the Middle East and a 30-day extension of a U.S. sanctions waiver for Russian oil were identified as contributing to the currency’s strength. Bank Saint Petersburg analysts also noted that expectations surrounding the scheduled talks between the two presidents could be providing additional support to the rouble.
Ushakov added that Russia boosted oil deliveries to China by more than a third in the first quarter of this year, reaching 31 million metric tons, and reiterated that China remains the largest buyer of Russian oil.
On a broader basis, the rouble has advanced since the beginning of April. From April 1, the currency has gained 12% against the U.S. dollar and 11% against the yuan.
Context and implications
- The shift toward yuan and rouble in bilateral settlements indicates a marked move in trade currency composition between Russia and China.
- Energy trade and higher oil prices are cited as direct supports for the rouble, while short-term policy moves such as the U.S. sanctions waiver extension are also influencing market dynamics.
- Planned high-level discussions between Russian and Chinese leaders are being viewed by some analysts as a factor underpinning market expectations for further economic and energy cooperation.