MOSCOW: Russia will start buying yuan on the currency market next year if oil and gas revenues meet expectations, two sources said, opening a new front in an accelerating dedollarisation drive designed to reduce its dependency on Western finance.

Western sanctions on Moscow over its actions in Ukraine have curbed its use of and access to dollars and euros, and the Chinese currency’s role in Russia’s economy is growing fast.

Daily yuan-rouble trading volumes on the Moscow Exchange are already exceeding dollar-rouble trades on some days, according to Refinitiv data, a trend set be to accentuated in 2023 as an oil embargo and price cap squeeze Russia’s traditional export routes. Russia stopped intervening on the FX market in February due to restrictions imposed on its use of foreign exchange reserves after it sent tens of thousands of troops into Ukraine.

Interventions will resume next year in yuan, the two sources told Reuters, provided that revenues from oil and gas exports exceed 8 trillion roubles as set out in budget plans.

“The central bank can currently now buy yuan,” a banking source close to monetary authorities told Reuters. But the bank would not do so while the government continued, as now, to spend its oil and gas revenues.

“(However), if next year budget revenues from the export of oil and gas exceed 8 trillion roubles, then the central bank will buy yuan,” that source added.