Russian Banks Scramble for Yuan as Liquidity Shortfall Doubles
- New US sanctions spooked Chinese banks, deepening the shortage
- Local firms are filling the gap with costly central bank swaps
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Tighter US sanctions have curbed the flow of yuan to Russia, forcing local lenders to borrow the currency at a higher rate from the central bank.
China became Russia’s main trade partner after the Kremlin was severed from Western markets by penalties unleashed in response to the 2022 invasion of Ukraine. Amid Moscow and Beijing’s “no-limits friendship,” around $240 billion of imports and exports are now priced almost entirely in yuan.