Summary: The Russian rouble has strengthened to levels not seen in more than a year against the Chinese yuan and the U.S. dollar as attention turns to a state visit to China expected to include new energy deals. Market observers attribute the move to robust oil prices, a short-term extension of a U.S. sanctions waiver for Russian crude, surging exports to China and the shift toward yuan and rouble in bilateral trade settlements.
The Moscow Exchange recorded the rouble at 10.45 against the yuan on Tuesday, its firmest reading since February 2023. LSEG data showed the currency slipped to the stronger side of the 72 level against the U.S. dollar on the same day, marking its best position versus the dollar since March 2023.
Kremlin foreign policy aide Yuri Ushakov said that "practically all" payments in the $240 billion trade between the two countries are now made in yuan and rouble, which shields them from Western sanctions. That shift in invoicing has coincided with a notable increase in Russia's oil flows to China: Ushakov said Russia raised its oil shipments to China by more than a third to 31 million metric tons in the first quarter of this year.
Analysts point to several factors supporting the rouble. High oil prices linked to the war in the Middle East have bolstered Russia's energy revenues. Market participants also noted a surprise 30-day extension of the U.S. sanctions waiver for Russian oil, a development that has helped underpin demand and flows. In addition, expectations that President Vladimir Putin and Chinese leader Xi Jinping will agree to further energy cooperation - including discussions around the Power of Siberia 2 gas pipeline project to bring Yamal Peninsula gas to China - have reinforced sentiment.
Bank Saint Petersburg's analysts observed: "Apart from the factor of increased currency sales by exporters, the rouble could also be supported by news surrounding the planned content of talks between the leaders of Russia and China." The analysts' comment tied the currency's move to both commercial activity and the potential for policy-level commitments emerging from the impending summit.
Since April 1, the rouble has gained about 12% against the U.S. dollar and around 11% against the yuan, tracking the recent rise in oil prices and the related increase in energy receipts. China remains the largest buyer of Russian oil, a dynamic that continues to shape trade flows and currency settlement practices between the two countries.
Key points
- Rouble reached 10.45 per yuan - strongest since February 2023; moved stronger than the 72 mark against the dollar for the first time since March 2023.
- Support for the rouble includes higher oil prices driven by the war in the Middle East, a 30-day U.S. sanctions waiver extension for Russian oil, and elevated shipments of Russian crude to China.
- Shifts in trade invoicing to yuan and rouble in the $240 billion Russia-China trade relationship and expectations of new energy agreements are reinforcing currency flows and market sentiment.
Risks and uncertainties
- Reliance on sustained high oil prices - a reversal in energy prices would weaken the rouble and impact energy sector revenues.
- The 30-day extension of the U.S. sanctions waiver is temporary - the short duration creates uncertainty for exporters and markets that depend on continued access for Russian oil.
- Outcomes of the planned talks between Russia and China are not guaranteed - market support tied to expectations of new deals could shift if negotiations do not produce concrete agreements.
The currency moves reflect an intersection of commodity-driven cash flows, evolving trade settlement practices and geopolitical developments tied to senior-level diplomacy. Observers will be watching both commodity markets and the policy signals from the upcoming bilateral discussions for clues on whether recent gains can be sustained.