In a new exchange rule, China is seeking to protect itself from big moves in the Russian ruble. Beijing said it would double the margin size by which the ruble can move against the yuan. That means China doesn’t have to subsidize Russian buyers purchasing Chinese goods. Loading Something is loading.
China is seeking to protect itself and its fiat currency from Western sanctions aimed at Russia’s economy as President Vladimir Putin’s forces attack Ukraine.
Starting Friday, the China Foreign Exchange Trade System will double the margin by which the Russian ruble can move against the Chinese yuan to 10% in daily state-controlled trading.
The ruble has collapsed against other foreign currencies as sanctions from Europe and the US have hit Russia’s financial system. The ruble is down 40% against the US dollar this year and is now worth less than a penny.
The widespread sanctions — targeting Russian banks, billionaires, oil, and even crypto — came after Putin’s military launched a full-scale invasion of Ukraine last month. Western companies have even joined the fight by pulling out of Russia in response to the Ukraine war.
China hasn’t imposed its own sanctions and has largely steered clear of criticizing the attack. But the move to expand the margin of exchange for the ruble against the yuan means the country wouldn’t have to subsidize Russian buyers of Chinese goods who use rubles at a rate different from market prices.
Moscow’s exchange re-opened trading of the ruble yesterday, giving Russians their first chance at responding to the latest round of Western sanctions, and they dumped the currency.