Russia’s plan to replace the dollar with the yuan failed because of U.S. secondary sanctions

Russia has effectively given up its effort to replace the dollar with the yuan in foreign trade because of U.S. secondary sanctions, Bloomberg reported.

Russia began shifting aggressively to the yuan after the start of its full-scale war with Ukraine and the imposition of Western sanctions. By 2024, the currency accounted for nearly half of the country’s foreign trade settlements, became the most traded currency on the Moscow Exchange, and overtook the dollar in bank deposit volume.

The situation began to shift after the U.S. tightened secondary sanctions against banks in June 2024. Fearing restrictions, Chinese financial institutions started cutting off cooperation with Russia, freezing payments, and returning funds to senders.

The yuan’s share of settlements for Russian exports has fallen by half from its 2024 peak, to 22%. Russia now receives 69% of its export revenue from trade with Asian countries in rubles, while the Chinese currency’s share of global payments has returned to its prewar level.

Some payment channels still work, but none guarantees that transactions will succeed, sources at companies that help Russian businesses make payments to China told Bloomberg. Many transactions now run through intermediaries rather than directly through banks.