China and Russia have shifted a large part of their energy trade, including oil and coal to yuan instead of dollars amid the sanctions on Russia's financial institution, Reuters reported, citing multiple sources.
China's yuan became the most widely-used currency for cross-border transactions in China, outpacing dollars for the first time, although its share in the global payments currency remained low at 2.5% compared with 39.4% for dollar and 35.8% for the euro, official data showed.
As U.S. and EU buyers shunned purchases of Russian goods during the Russia-Ukraine conflicts, Chinese buyers snapped up discounted crude oil, coal and aluminium.
China opposes unilateral sanctions but is also wary of being exposed to secondary sanctions, and more Chinese traders increased use of yuan to buy energy products from Russia.
Two-thirds of trade between Beijing and Moscow was settled in roubles or yuan after the sanctions, Russian President Vladimir Putin said.
Moscow will continue to accept more payments for energy exports in roubles and yuan, Russian Deputy Prime Minister Alexander Novak said in April.
There is a likelihood that more countries would join in the yuan settlement to reduce risks of using dollar, particularly in the wake of U.S.-led sanctions against Russian banks. The trade using yuan will predominantly be used for commodity and energy trade at present and for the foreseeable next few years, Reuters reported, citing predictions from Chi Lo, senior investment strategist at BNP Paribas Asset Management in Hong Kong.
Yuan is also gaining momentum globally despite still small share.
Argentina said in April it will start paying for Chinese imports in yuan to ease pressure on its dollar reserves, while in March France's TotalEnergies sold China the first yuan-settled LNG cargo, Reuters reported.
(Writing by Emma Yang Editing by Harry Huo)
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