The Chinese yuan is rapidly gaining traction as a fallback currency for U.S.-sanctioned nations, with Iran and Russia increasingly ditching the dollar to keep trade flowing.

Russia has gone even further, now that it is cut off from Society for Worldwide Interbank Financial Telecommunication (SWIFT) — the dominant global financial messaging system underpinning most cross-border transactions — after its Ukraine invasion.

Nevertheless, SWIFT remains the backbone of global finance, with the dollar accounting for 51% of global payments compared to just 3% for the yuan.

President Vladimir Putin said trade with China is now conducted “almost totally” in rubles and yuan, as Moscow leans on energy exports to Beijing to fund its war effort.

Meanwhile, transactions on China’s Cross-Border Interbank Payment System (CIPS) jumped to 1.46 trillion yuan ($214 billion) in March — up 50% in a month and triple 2021 levels — while April saw record daily volumes, signaling accelerating momentum, according to data from Chinese provider Wind and reporting by Nikkei Asia.

The shift comes as geopolitical pressure intensifies.

After U.S.-Israel strikes on Iran, Tehran began charging transit tolls through the Strait of Hormuz in yuan and cryptocurrency, effectively forcing friendly nations into alternative payment channels.

“Having been largely frozen out of the dollar-based system, Iran has little choice but to rely on China’s currency,” the Nikkei report notes.

Meanwhile, Saudi Arabia is quietly moving in the same direction, with 41% of its oil trade reportedly settled in yuan in March.

China’s long-running push to challenge dollar dominance is gaining ground through CIPS — now used by more than 1,700 financial institutions — and new digital yuan pilots across the Middle East.

The currency has even strengthened against the dollar since the Iran conflict, while other Asian currencies weaken under rising oil costs.

While SWIFT remains, hands down, the dominent banking clearing system of the globe, the trajectory is clear. As one economist put it: “The yuan’s share is gradually increasing, and the movement away from the dollar will also accelerate.”