Russian companies that do business with China have encountered more headwinds in recent days as Chinese banks raised the yuan-ruble exchange rate to capitalize on their neighbor's weakened currency.
While the yuan currently buys 12.07 rubles at the Russian central bank's exchange rate, Chinese banks are selling the currency at 13 rubles per yuan, charging a premium over the Russian central bank rate of 12.07 rubles, the Moscow Times reported on Thursday.
With Western sanctions, capital flight, and reduced export revenue weakening the ruble since Russia's 2022 invasion of Ukraine, the country has come to rely heavily on the yuan for cross border settlements with "no-limits partnership" China as well with third countries. But this great dependency has left it more vulnerable to exploitation by foreign lenders.
The higher exchange rates have been observed at both large and small financial institutions across China.
The state-owned Bank of China has ramped its up to 13.09 rubles per yuan from 12.3 at the end of last week.
The Bank of China in late July began processing payments from Russia again after halting them in June out of concern for U.S. secondary sanctions on trade with Russian industries.
However, one Russian importer told the Moscow Times these resumed transactions have been slow and inconsistent and exclude Russian industries such as electrical appliances subject to U.S. sanctions over their potential to aid Putin's war machine.
Chinese banks are not the first to profit from the ruble's plight. Mongolia and Turkey have for some time converted rubles into yuan several percentage points above market rates. "Everyone takes advantage of the opportunity to make money on our difficult situation," an analyst at Moscow-based investment banking firm Sberbank CIB told the news outlet.
The Chinese and Russian foreign ministries did not immediately respond to written requests for comment.
Meanwhile, regional banks in rural areas have hiked exchange rates by 5.5 to 7 percent since Tuesday.
Russia's latest currency woes follow the U.S. Office of Foreign Assets Control's (OFAC) inclusion of the Moscow Exchange on its currency list, with the dollar, euro, and Hong Kong dollar ceasing to be traded on the exchange as a result.
On Tuesday, OFAC licenses offering institutions a grace period for concluding operations with MOEX expired.
Newsweek reached out to the U.S. Treasury with an emailed request for comment.
Further frustrating China-Russia trade, which has slowed significantly this year amid sanctions after hitting a record high of $240 billion in 2023, Russian importers continue to report delayed declined payments.
As many as 98 percent of Chinese banks are rejecting direct Chinese yuan payments from Russia, the Russian newspaper Izvestia reported Monday, citing business representatives.
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