Yuan's Usage in International Trade Settlements Surges... Impact of Ukraine War

February International Trade Market Share at 4.5%
Closely Following Eurozone's 6% Range
Surge in Russian Usage Due to Western Sanctions

Since the Russia-Ukraine war, Western countries have imposed sanctions on Russia, leading to an increase in the use of the Chinese yuan for settlements in the international community.

Major foreign media outlets reported on the 12th (local time), citing trade finance data from the Society for Worldwide Interbank Financial Telecommunication (SWIFT), that the yuan's share as a currency used for import payments in the trade market was 4.5% last February. Considering that the yuan's share was less than 2% the previous year, its usage rate has significantly increased within a year. The yuan is closely trailing the euro, which accounts for 6% of the total settlement share.

Chinese Yuan and US Dollar

The increase in the use of the yuan for international settlements is analyzed as a phenomenon resulting from Russia selling oil, which it had previously exported to Europe and the United States, to China due to Western sanctions. According to a report by TASS news agency on the 10th of last month, citing statistics from the Russian Central Bank, the proportion of yuan used in import settlements by Russia soared to 23% last year after the Ukraine war. Before the war, in 2021, the yuan settlement ratio was only 4%.

Japan's private think tank, Daiwa Institute of Research, also stated that the average daily number of yuan settlement transactions in the Cross-Border Interbank Payment System (CIPS) increased by 1.5 times compared to before the Ukraine invasion, reaching 21,000 transactions. Additionally, over 100 financial institutions newly joined China's CIPS throughout last year. China established its own yuan settlement system to counter the dollar-centered global trade settlement network, SWIFT.

The increase in yuan settlement rates triggered by the Russia-Ukraine war is expected to be favorable for China, which is challenging the dollar's hegemony. China is currently trying to increase the proportion of yuan settlements in trade with emerging countries to dent the status of the US dollar. Last month, China signed its first yuan loan cooperation with Saudi Arabia's state-owned bank and agreed to use each other's currencies instead of the dollar in trade transactions with Brazil.

Mansur Mohiuddin, chief economist at a Singaporean bank, told major foreign media, "(The yuan) is showing significant movement," adding, "It is hard to believe that factors other than the Ukraine war are behind this change."

This content was produced with the assistance of AI translation services.