Russia’s longstanding desire to reduce its dependence on dollar The unpredictable US has reached a major milestone as the share of exports sold in US currency fell below 50% for the first time.
The share of the ruble, euro and dollar in settlements in the international trade of Russia. Source: Bloomberg
According to central bank figures released late Monday night, the main decline in the use of the dollar occurred in Russia’s trade with China: more than three-quarters of the dollar turnover was replaced by the euro. According to data for the fourth quarter, the share of the single currency in total exports jumped by more than 10 percentage points to 36%.
Multiple rounds of sanctions and the constant threat of future ones have prompted Russia to look for ways to isolate its economy from US intervention. The central bank also cut its treasury holdings in international reserves, instead increasing the share of gold and the euro. The move away from the dollar in trade with China accelerated in 2019, when the major oil company Rosneft switched to the euro. While the share of the single currency in trade with China declined in the first half of last year, it rose sharply in the fourth quarter.
Graph of the share of the euro and the dollar in the calculations of Russia and China. Source: Bloomberg
Washington this month imposed new sanctions on Russia, including restrictions on the purchase of newly issued sovereign debt, in response to allegations that Moscow was behind the SolarWinds Corp. hack. and intervened in last year’s US elections. The Biden administration has said it is ready to escalate and strengthen sanctions if the Kremlin does not stop hacker attacks and attempts to intervene in the political process in the United States.
Russia must take urgent measures to reduce the use of the dollar to a minimum to eliminate dependence on “this” toxic source of constant hostilities, “Deputy Foreign Minister Sergei Ryabkov said in an interview in February.
Based on materials from Bloomberg