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Rouble and Yuan in Russia
Alexander Novak, the deputy prime minister of Russia, recently asserted that given Moscow’s efforts to abandon US dollars and euros, Russia is bound to continue taking additional payments for energy exports in the rouble and the yuan.
Russia’s 2022 Settlement Shares Increased
Since the start of what the Kremlin refers to as a “special military operation” in Ukraine in February 2022, sanctions have been placed on Moscow, and it has been noted that Russia has been severing commercial and cultural links with the West. Moscow is now known to have been developing tight ties with the energy-hungry China as well as India and other nations it considers friendly in light of this.
Another factor that prompted Russia to abandon the US dollar and euro was the West’s confiscation of $300 billion, or half of Russia’s international reserves, just moments after Moscow pushed tens of thousands of troops into Ukraine last year.
According to Novak, who was quoted on Russian state television, the yuan and rouble are currently in great demand, implying that the vector will continue. He also claimed that China had already paid in yuan for gas and partially for oil and that there are rouble transactions as well. It is also worth noting that, according to the Russian central bank, the yuan’s proportion in Russian import settlements in 2022 increased from 4% to 23%.
Russia and China’s Alliance to Leave US Dollar
China and Brazil have successfully forged an agreement to conduct international trade in their respective currencies, thereby doing away with the US dollar as a middleman, before the month of March this year has concluded. The Brazilian government officially announced this information. This partnership was also Beijing’s most recent attack on the mighty dollar.
With the help of this alliance, China, the US’s foremost economic rival, and Brazil, the largest economy in Latin America, will be able to conduct their extensive trade and financial transactions without the use of the US dollar, exchanging their respective currencies directly (yuan for reais and vice versa).
It is important to note that China is Brazil’s largest trading partner, with a record-breaking $150.5 billion in bilateral trade last year. On the other hand, the Brazilian Trade and Investment Promotion Agency asserted in a statement that “The expectation is that this will reduce costs… promote even greater bilateral trade and facilitate investment.”
Following a high-level commercial summit between China and Brazil in Beijing, a preliminary agreement was announced in January that is understood to have led to this partnership.