Yuan trading at risk on Moscow Exchange amid escalating sanctions and stock market panic
There’s a growing panic on the Russian stock market, and now the Moscow Exchange may have to halt trading of the Chinese national currency, the yuan.
This comes in the wake of the Moscow Exchange being cut off from trading in US dollars and euros, leading to mounting concerns that the Chinese yuan could be next.
Reports from Russian media, citing experts, indicate high risks that Chinese banks will cease cooperation with the Moscow Exchange and the National Clearing Center of the Russian Federation, both of which now face Western sanctions. Should this happen, trading in the yuan would have to be suspended.
Sergey Romanchuk, the former president of ACI Russia—an organization uniting professional participants of the Russian currency and money market—is deeply pessimistic. When asked if Chinese banks would continue their dealings with Russia, he replied, “More likely no than yes.”
An expert from the Russian investment company “Ricom-Trust” also stated the high likelihood of stopping yuan trading.
Notably, subsidiaries of major Chinese banks in Russia have already stopped dollar and euro transactions in response to sanctions, dealing a severe blow to trade between Moscow and Beijing.
The sanctions against the Moscow Exchange have resulted in a sharp shortage of yuan in Russia. On June 13, Russian banks, unable to procure dollars and euros, requested a record amount of over 14 billion yuan (approximately $1.96 billion USD ) from the Central Bank. This move was aimed at facilitating the transfer of funds to Chinese bank accounts, forcing the Central Bank to impose operational limits.