According to a report that has been recently published, a considerable number of around 50 banks in Russia have commenced accepting deposits in Chinese yuan. The reason behind this shift towards yuan accounts is the low demand for dollar accounts.
As a result of this development, Russian customers now have the option to save in yuan rather than the US dollar. This move is in line with the Russian government’s objective to reduce their dependence on the US dollar and diversify their foreign currency reserves.
Dollar Demand Declines
Based on data from the Bank of Russia, there has been a noticeable reduction in the number of Russians interested in opening local bank accounts in major Western currencies due to restrictions on what they can do with their money.
In 2022, approximately 50% of all foreign currency savings held in Russian banks were transferred to foreign bank accounts, and there has been a significant decrease in interest for new deposits.
Anna Romanenko, Director of Communications at Vbr.ru, anticipates a substantial decline in demand for deposits in U.S. dollars and euros. She also observes that the number of banks supporting deposits in these foreign currencies has decreased, with no more than three dozen lenders currently offering such accounts.
Reasons for this Trend
One of the main reasons for this current trend is the recent $10,000 cap on withdrawals, which was in effect until September 9th, 2022. Additionally, Russians are only able to withdraw dollars if they were deposited into their accounts prior to March 9th, 2022, and any newly credited amounts must first be converted to Russian rubles before they can be withdrawn.
It is believed that if these restrictions are extended, interest in these types of deposits will continue to decline. However, Anna Romanenko, an expert in the field, suggests that there may be an increase in demand for the Chinese yuan as an alternative foreign currency.
In fact, 49 banks in the Russian Federation already offer such a service, and since March, there has been a significant surge in demand for the yuan. Romanenko notes that interest in the Chinese currency has tripled in just one month and continues to increase by 15-20% on a weekly basis.