Reuters reported that Russian companies are moving to open accounts at Chinese commercial banks to avoid Western sanctions.
According to the report, an official at the Moscow branch of a Chinese state-run bank, who requested anonymity, said 200 to 300 Russian companies have inquired about establishing accounts for business with China over the past few days.
An entrepreneur, who has been doing business in Russia for a long time, also said several Russian companies with business relations are planning to open yuan accounts.
The entrepreneur said Russian companies are turning to China at a time when they cannot use dollars or euros and businesses with the U.S. and Europe are blocked, adding that this is a natural result of Western sanctions.
In fact, FESCO, a Russian shipping and logistics company, said it will allow customers to pay in yuan this week.
Reuters pointed out that many Russian companies have no choice but to use the yuan and the Russian rubles to do business, but the plunge in the value of the rubles will inevitably worsen their profitability.
The value of the ruble has fallen to an all-time low due to Western sanctions on Russia and a downgrade in Russian credit ratings following the invasion of Ukraine.
The exchange rate of rubles soared to 117.5 rubles per dollar and 124.1 rubles per euro on the Moscow foreign exchange exchange earlier in the day.
This is the first time that the Russian rubble exchange rate has exceeded 110 rubles per dollar.
In a related development, Bloomberg said Russia has large-scale Chinese yuan assets and predicted that if the Chinese government decides to face Western sanctions, it will be able to provide financial support to Russia.
Bloomberg explained that China and Russia’s central banks have signed billions of dollars worth of currency swap agreements, and that China’s independent international yuan payment system, “CiPS,” is also available to the Russian financial sector.
According to Australia’s New Zealand Bank, a major Australian bank, Russia’s central bank and sovereign wealth fund are estimated to hold a total of $140 billion worth of Chinese bonds.
