Russia Vows To Use Chinese Yuan For International Trade…
Russian President Vladimir Putin has committed to push for the use of the Chinese yuan as a settlement currency with nations in Asia, Africa, and Latin America as part of the talks he is currently holding in Russia with Chinese President Xi Jinping. According to Putin, encouraging the use of national currencies in international trade “should be further encouraged.”
Russian Support for the Use of the Renminbi in International Settlements
Russian President Vladimir Putin has advocated using another currency in place of the US dollar to settle international payments. President of Russia Vladimir Putin stated his support for the use of the Chinese yuan as a medium of exchange in bilateral commerce, particularly with emerging economies, as part of the visit that China’s President Xi Jinping is making to Russia.
Quoted by the Tass news agency, Putin stated:
We support the use of Chinese yuan in payments between Russia and countries of Asia, Africa, and Latin America.
According to Putin, this could be extended further with a stronger level of integration between the financial and market institutions in both countries. Today, two-thirds of commercial exchanges between Russia and China are managed using national currencies.
Leaving the Dollar Behind
As part of its bilateral and multilateral payment agreements, Russia is one of a number of nations attempting to move away from the U.S. dollar. According to data published in August by the Society for Worldwide Interbank Financial Telecommunication (SWIFT), Russia was the third-largest market for yuan usage in international payments. The Chinese yuan was the fifth-most used currency at the time for these settlements.
Analysts believe that these numbers could increase, though, because of the altered global economic environment that the ongoing crisis between Russia and Ukraine is bringing about. Director Dong Dengxin of Wuhan University’s Finance and Securities Institute said:
If sanctions on Russia continue, the share will continue to increase in its use.
Some, though, think that Russia may eventually suffer from its reliance on the Chinese yuan. Alexandra Propopenko, an analyst at the Carnegie Endowment for International Peace, wrote:
Russia is swapping its dollar dependence for reliance on the yuan. Should relations with China deteriorate, Russia may face reserve losses and payment disruptions.
Other organizations have their own strategies for leaving the dollar behind. Russia is one of the BRICS countries who are actively attempting to create their own reserve currency. Brazil and Argentina also announced in January that a Latam shared currency would be created and utilized for transactions.