Russia becomes the third largest market for payments in

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Russia has moved up to third on a list of countries outside mainland China that use the yuan for global payments, underscoring how it is affected by Western sanctions.

Russia didn’t even feature on the monthly list published by global financial messaging firm SWIFT before its invasion of Ukraine in February, but the latest figures released on Thursday show it is surpassed only by Hong Kong and Britain.

Russian firms and banks were involved in nearly 4% of international yuan payments by value in July, according to SWIFT. Its share increased from 1.42% in the previous month and from zero in February, when the Kremlin’s action in Ukraine, which Moscow calls a “special military operation”, led to the imposition of sanctions by the West.

Hong Kong remains, unsurprisingly, the main source of yuan transactions outside mainland China, with 73.8% of the total, followed by the UK, which accounted for 6.4%.

The sudden entry of Russia on the list will support the argument that the sanctions are working and removing it from the global banking system based on US dollars. But he will also support those who say that the sanctions will bring Moscow and Beijing closer together.

In addition to the impact on the financial sector, hundreds of major Western firms have withdrawn or severely reduced their operations in Russia in response to the war.

Meanwhile, Russia has developed its own SWIFT-style financial messaging system, set up special accounts at some as-yet-unsanctioned banks and continues to trade key exports such as oil with countries from China and India to Turkey .

The latest SWIFT data also confirmed that the ruble is no longer among the top 20 global currencies used in international payments markets. In December, it was ranked 16th, with a share of 0.3% in terms of transaction value, but has not been on the list since then.

The first four places on this list are occupied by the US dollar, the euro, the pound sterling and the Japanese yen, followed by the yuan in fifth place.