Russian companies are preparing to switch contracts to renminbi and other Asian currencies amid fears that western sanctions may freeze them out of the US dollar market, according to two top bankers.
“Over the last few weeks there has been a significant interest in the market from large Russian corporations to start using various products in renminbi and other Asian currencies and to set up accounts in Asian locations,” Pavel Teplukhin, head of Deutsche Bank in Russia, told the Financial Times.
Andrei Kostin, chief executive of state bank VTB, said that expanding the use of non-dollar currencies was one of the bank’s “main tasks”.
“Given the extent of our bilateral trade with China, developing the use of settlements in roubles and yuan [renminbi] is a priority on the agenda, and so we are working on it now,” he told Russia’s President Vladimir Putin during a briefing. “Since May, we have been carrying out this work.”
The move to open accounts to trade in renminbi, Hong Kong dollars or Singapore dollars highlights Russia’s attempt to pivot towards Asia as its relations with Europe become strained.
Sanctions are pushing Russian companies to reduce their dependence on western financial markets while U.S. and European banks have dramatically slowed their lending activity in Russia since the annexation of Crimea in March.