China's yuan has surpassed the US dollar as the most traded foreign currency on the Moscow Exchange, according to data from Russian news outlet Kommersant Daily. The yuan accounted for 42% of all foreign currency trades on the exchange, while the dollar's share fell to 39.5%. This shift is part of a broader trend known as dedollarization, which gained momentum after the West imposed sanctions on Russia following its invasion of Ukraine in 2022. These sanctions limited Russia's access to the global financial system, prompting the country to rely more on currencies other than the dollar and euro.
China has been particularly aggressive in its efforts to internationalize the yuan, signing currency swap agreements and providing yuan-denominated loans. As a result, the yuan's use in global payments has doubled since 2022, making it the fourth most used currency in November 2023. Furthermore, the yuan overtook the euro as the second most used currency in global trade finance in September, thanks to Beijing's lower interest rates.
This shift away from the dollar is not limited to Russia. Countries like China, India, and Iran are also attempting to use non-dollar currencies for trade transactions and international loans to reduce their dependence on the West. These efforts aim to weaken the hold of the US and its allies on their economies.