This is why Russia is promoting the yuan

With Russia being officially blocked off from both the US dollar and the euro, the state-owned VTB Bank has given its customers the option of opening Chinese yuan savings accounts with a maximum interest rate of 8%.

Russia’s second-largest bank has been battered by Western sanctions aimed at completely isolating Russia due to its involvement in the Ukraine conflict.

“In light of the rising dollar and euro exchange rates, many clients are showing interest in investing in other currencies, and the yuan is one of the most affordable and promising options for investing funds,” the bank said in a statement published by Russia Today.

Existing users are apparently allowed to open deposits on VTB Online remotely with a minimum of 100 yuan ($16). They can deposit a minimum of 500 yuan at VTB branches.

The current offer, according to the bank, will be the most advantageous alternative to deposits in other foreign currencies. A three-month deposit pays an annual interest of 8% in dollars and 7% in euros.

Meanwhile, a six-month ruble deposit presently pays a 21 percent annual percentage interest. Customers had invested more than a trillion rubles ($15 billion) in traditional savings products in the previous week, according to VTB.

US bans dollar in Russia

On Friday, the United States barred the direct or indirect exportation, re-exportation, sale, or supply of US dollar-denominated banknotes to the Russian government or any person situated in Russia from the United States or by a United States person.

The United States is increasing economic pressure on Russia as a result of the Ukraine conflict.

Because most oil contracts are handled in US money, this poses a big difficulty for Russia, a major oil exporter.

The European Union also prohibited the export and import of euro banknotes to Russia on March 2. Only persons coming in Russia with legal immunity, diplomatic missions, and international organisations were exempted.