Russia is now the 3rd-biggest market for yuan transactions outside of mainland China as sanctions block dollar, euro payments

• Russia stepped up to become the third-largest market for yuan transactions outside of mainland China.
• SWIFT data shows Russian companies and banks were involved in nearly 4% of global transactions using the yuan.

Russia is the third-largest market for yuan transactions outside the Chinese mainland as Western sanctions block payments using the dollar and euro.

Companies and banks based in Russia were involved in nearly 4% of yuan transactions globally in July, according to SWIFT data compiled by Reuters. That's up from 1.42% in June and zero in February, when Russia launched its war on Ukraine.

Hong Kong retained the top spot as the biggest user of the yuan outside the mainland, accounting for 73.8%. Britain is in second with 6.4%.

Meanwhile, the yuan is the fifth most widely used currency in international payments markets, according to SWIFT data. The US dollar remains at the top, followed by the euro, British pound and Japanese yen.

The Kremlin has steadily increased its use of the Chinese currency in order to circumvent Western sanctions.

Russia has taken payment for its oil exports in yuan instead of the dollar, which is the primary currency for most commodities. Russia has also accepted the yuan for coal shipments. And in March, Russia's central bank said it would use the yuan in its currency reserves.

After Russia invaded Ukraine, Western governments froze Moscow's foreign-currency reserves held abroad, largely preventing the country from transacting in dollars and euros.