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US sanctions on Russia double yuan and rouble trading in Kazakhstan

Wednesday, 25 September 2024, 10:25
US sanctions on Russia double yuan and rouble trading in Kazakhstan
Stock Photo: Getty Images

Russian banks and companies are increasingly choosing Kazakhstan for currency operations required to make payments to China after US sanctions made this more difficult within Russia itself.

Source: Bloomberg, citing sources

From June to August, the average monthly trading volumes of the tenge with Chinese and Russian currencies more than doubled, reaching 893 million yuan (US$127 million) and 86 billion roubles (US$925 million) respectively, compared to the first five months of the year.

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The increase "is connected to the halt of US dollar trading at the Moscow exchange", the central bank in Astana said in a written response to questions. The bank also noted that tenge-dollar trading grew by 50% this year due to "growth in economic activity and trade" in the country, which borders both China and Russia.

People familiar with the situation say that Kazakh banks are seeing rising demand for yuan from Russian businesses. These transactions can be conducted in currencies other than tenge, so they are not reflected in the official statistics of the National Bank. 

Banks from other neighbouring countries are also turning to their Kazakh counterparts to trade Chinese currency, including yuan-rouble and yuan-dollar pairs, sources report. Many transactions are carried out by matching buyers and sellers among Kazakh bank clients, again without these deals being recorded in official statistics.

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Kazakhstan is one of the countries playing a central role in US and allied efforts to isolate the Russian economy.

The total trading volume for the yuan-dollar pair on the Kazakhstan Stock Exchange from June to August reached US$1.63 billion, up 33% from US$1.23 billion during the same period last year, according to exchange data.

Background:

  • A high-ranking official stated that Kazakhstan will not blindly follow sanctions against Russia. The country will now focus on protecting its own economic interests. 
  • Kazakhstan's Freedom Bank has suspended transfers via the Zolotaya Korona Russian payment system.

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