OSW Commentary - Russia’s weak spot: the financial sanctions are working - Rising US pressure on Russia’s financial market

Export compa- nies have been particularly active in this regard after they were compelled to reduce transactions in dollars and euros and switch to settlements in roubles and other national currencies, including the yuan, the dirham, and the rupee. [...] Meanwhile, the value of Chinese exports to Russia in the first eight months of 2024 remained largely unchanged compared to the same period last year (see Chart 2). [...] Moreover, the yuan has become the principal settlement currency for Russia’s foreign trade and the sole reserve currency for the Central Bank of Russia. [...] An analysis of China-Russia trade since the beginning of this year suggests that payment issues and uncertainty surrounding the implementation of additional US sanctions may have resulted in a reduction in the sales of sensitive goods (including large trucks, excavators, lathes, and vertical machining centres) from China to Russia and caused a temporary decline in overall trade between the two cou. [...] Due to the yuan’s importance in the Russian economy, the sanctions have had a significant impact on Chinese-based global entities, but in the long term, China may ultimately benefit the most from Russia’s difficulties.