Russian rouble at over three-year high against yuan ahead of Putin’s visit to China

MOSCOW, May 19 (Reuters) – The Russian ruble rose to its strongest level since February 2023 against the Chinese yuan, Russia’s most traded currency, on Tuesday, ahead of President Vladimir Putin’s visit to China where new business deals are on the agenda.

Kremlin foreign policy deputy Yuri Ushakov said before the visit that “almost all” payments in the $240 billion trade between the two countries are now made in yuan and rubles, which protects them from Western sanctions.

Moscow Stock Exchange data showed that the ruble strengthened to 10.45 against the yuan. LSEG data showed the ruble moved to the strong side of the 72 level against the US dollar on Tuesday for the first time since March 2023.

The ruble is supported by high oil prices as a result of the war in the Middle East, a surprise 30-day extension of the US sanctions exemption for Russian oil and expectations of new business deals between Russia and China.

“Apart from the factor of increased foreign exchange sales by exporters, news regarding the content of planned talks between the leaders of Russia and China may also support the ruble,” Bank Saint Petersburg analysts said.

Putin and Chinese leader Xi Jinping are expected to discuss new energy deals, including the Power of Siberia 2 gas pipeline, which will bring gas from the Yamal Peninsula in Western Siberia to China. China remains the largest buyer of Russian oil.

Russia increased its oil supplies to China by more than a third in the first quarter of this year, to 31 million mt, Ushakov said on Monday.

Following the rise in oil prices and Russia’s energy revenues, the ruble has increased by 12% against the dollar and 11% against the yuan since April 1. Many forecasters see Russia as one of the biggest beneficiaries of the war, which has led to an unprecedented disruption of energy supplies in the Middle East.

(Reporting by Gleb Bryanski; Editing by Chiara Rodriquez)