Chinese Yuan Replacing the Dollar and Euro Deposits in Russian Banks

Chinese Yuan Replacing the Dollar and Euro Deposits in Russian Banks

The Chinese yuan seems to be replacing the dollar and euro deposits in Russian banks as Western sanctions continue to impact customers. A growing number of banks in Russia are offering customers the option to save in Chinese yuan. The trend coincides with declining demand for US dollar and euro deposits amid currency restrictions that triggered a flight of funds to bank accounts abroad.

Requests for Yuan Deposits Surge in Russia

Fewer Russians want to open bank accounts in major Western currencies amid restrictions on what they can do with their money. Data from the Bank of Russia shows that about half of all foreign currency savings in Russian banks have been transferred to foreign bank accounts in 2022, and interest in new deposits has noticeably dropped, reports the daily Izvestia.

Anna Romanenko, director of communications at the financial marketplace Vbr.ru, predicts a "massive decline" in demand for deposits in US dollars and euros. The number of banks supporting deposits in US dollars and euros has significantly declined, and hardly about three dozen lenders open such accounts, she said.

"According to the data in January of this year, the number of online requests for deposits in dollars and euros has dipped to a minimum in the past two years," Romanenko added. The weakening of the ruble in March temporarily pushed interest in the dollar up, but demand for the euro is "still minimal," she noted.

Demand for Dollar and Euro Accounts to Dip

The USD 10,000 cap on withdrawals was in place until September 9, 2022. Russians were allowed to withdraw dollars if they were deposited into their accounts before March 9, 2022. All newly credited accounts were converted to Russian rubles before the withdrawal. "If the restrictions are extended, interest in such deposits will continue to fall," said Romanenko.

Anna Romanenko highlighted that 49 banks in the Russian Federation already have such offerings, and an increase in demand for the Chinese yuan is therefore most likely to be expected as an alternative foreign currency.

"Since March, we have seen a surge in demand for the yuan; interest in the Chinese currency has tripled in a month and continues to increase by 15-20% every week. The attractive terms are increasing too, with deposits with a rate of up to 3%," she elaborated.

March reports have revealed that the yuan has replaced the euro in the top three currencies preferred by the Russians for their savings. A Finam financial portal study has revealed that 17% of private individuals held the Chinese yuan, 8% had the euro, and over a third chose the ruble.

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