The Russians found an alternative to dollars and euros: experts argued about the future of currencies

Will the yuan come to exchange offices

Imagine: in the windows of currency “exchangers” instead of the now familiar neon numbers 70 and 75, an incomprehensible ten appeared. This is the exchange rate of the Chinese yuan against the domestic ruble, which has displaced the exchange rates of the dollar and the euro. How real is such a scenario, in some ways comparable to the butterfly effect from the famous story “Thunder Came” by Ray Bradbury?

Experts agree that already in 2023 or 2024, the yuan may well become the base in the course of the exchange rate of the Russian currency. When the volume of trading on the Moscow Exchange grows several times and takes the first place, the yuan will naturally push the dollar, which it “steps on the heels of.” Today, this volume has come close to the dollar figure: 733 billion rubles against 811 billion in the first three weeks of January.

The trade turnover between Moscow and Beijing is growing rapidly, and the share of the yuan in settlements is increasing. While the share of transactions in “toxic” dollars is declining due to sanctions. Accordingly, private investor Fyodor Sidorov argues, the yuan may become the first foreign currency in demand both in terms of Russia’s foreign trade and in our country’s reserves. For the domestic consumer, this means that the cost of imports will no longer depend on the dollar and the euro (their prices against the ruble), but on the yuan. The problem is that the Chinese economy is not as stable as the American one. As GDP stagnates, the yuan may gradually weaken against the dollar. Accordingly, he will lose his positions in Russia, undermining not only state reserves, but also the savings of citizens in yuan.

“Whether the dollar replaces the yuan or not makes no difference to ordinary Russians,” said Vladislav Antonov, a financial analyst at BitRiver. – At the end of 2022, the volume of trading in Chinese currency increased, but such dynamics is of interest only to speculators on the Moscow Exchange. The more liquidity, the more attractive the currency. If the yuan continues to rise in price, goods from the PRC will rise in price, and nothing more. Banks now have nothing to stop them from selling the yuan, which attracts many as a defensive asset, so theoretically it can appear in exchange offices on a par with the dollar and the euro.”

The American currency serves as a benchmark in the formation of the ruble for one simple reason: we still live in an American-centric world, where the dollar is the basis of all financial architecture. But as trade between Moscow and Beijing grows and the volume of yuan trading on the Moscow Exchange increases, Russia’s transition from the dollar to the yuan (with the exchange rate of the ruble) may become inevitable within the next two years, TeleTrade analyst Alexei Fedorov believes. In his opinion, in this case, banks and “exchangers” will gradually worsen the conditions for placing and exchanging dollars. What is observed now. Dollars will remain in the country, but due to their unprofitability, they will be used to a lesser extent – both by business and the population.

“Bilateral Russian-Chinese trade turnover has approached $200 billion, the growing volume of transactions in yuan in the corporate sector indirectly affects the situation with the personal finances of Russians,” says Mikhail Belyaev, Candidate of Financial Analyst, Economics. – There is no talk of a complete departure from the dollar yet, it’s just that its living space in Russia is narrowing. The “American” will not disappear from the exchange offices, just at some point an additional line for the yuan may appear there, along with “unfriendly” currencies. And then everyone will decide for himself in which currency to make a deal, and what to choose as an investment asset.”

Under any circumstances, the demand of individuals for dollars and euros in the Russian Federation will continue: it is much more convenient and safer to travel with them on tours than with the yuan, which is not accepted everywhere in the world, reminds Belyaev.

“In 2022, a lot of people who had dollar accounts and deposits suffered losses due to sanctions, due to the disconnection of large banks from the Swift payment system,” says financial analyst Sergey Drozdov. – In fact, the Russians were left no choice – and this is the yuan, which in itself is far from perfect. We must not forget: firstly, this is not a fully convertible currency (its exchange rate is regulated by the People’s Bank of China), and secondly, it is the currency of a developing country, which means that political risks are inherent in it. For example, trade wars between Washington and Beijing may resume at any moment, which clearly will not benefit the Chinese currency.”

As for exchange offices, you only need to buy cash dollars and euros, which will be accepted with great joy in any country – “friendly” or not, it doesn’t matter. Non-cash transactions are quite another matter: the yuan is the most relevant here, Drozdov notes. It makes sense to buy paper yuan only in case of a trip to China. And even then, you must first study the exchange rate, understand whether it is more profitable to acquire dollars in Russia, in order to then exchange them in China for the local currency.