Moscow
and Beijing are looking to extend the three-year $25 billion
yuan-ruble swap deal and seek greater use of domestic currencies in
trade. Experts have told RT this is likely to cut dependence on the
US dollar.
This
week, Russian Prime Minister Dmitry Medvedev said “the financial
regulators of the two countries are working on extending the
bilateral currency swap agreement for the next three years."
“In
2016, the share of national currencies in payments for exports of
Russian goods and services was 13 percent, imports 16 percent. In the
first quarter of 2017, these figures rose to 16 percent and 18
percent, respectively,” said Russian Deputy Prime Minister
Sergey Prikhodko.
Both
China and Russia are committed to promoting their own currencies, and
this means the dollar share is likely to shrink.
“That's
a fact, and it's not just indicative of the volume of transactions in
national currencies. Russia and China are already working together on
several BRICS multilateral agreements. Trade in national currencies
is just one aspect of the general trend that has emerged in the world
over the past decade,” a Moscow-based analyst Mehdi Mehdiyev
told RT’s German website, RT Deutsch.
Trade
in national currencies protects countries against "external
influences," helps to avoid risks of fluctuations in exchange
rates; swap agreements also help reduce the budget deficit, Mehdiyev
said.
Chinese
financial expert Andrew KP Leung told RT Deutsch that for Moscow,
trading in national currencies is a way to bypass Western sanctions,
and for Beijing to promote the yuan.
"China
is one of the largest buyers of Russian energy exports. The extension
of the currency swap will reduce transaction costs for Russia and
China. Trading in yuan will reduce Russia's dependency on the US
dollar," said Leung.
Sarkis
Tsaturyan, the Russian political scientist and editor-in-chief of the
Russian expert network Realist, said that de-dollarization will be a
long and painful process that can hit both China and Russia.
“Gradually,
Russia and China are moving away from the US dollar, but this is a
process that can take 15 to 20 years, as the economy of China is
based on the dollar. The currency reserves of China were over $3
trillion in July 2017. Each Chinese household owns up to $2,000 in US
government bonds. Under these circumstances, it is unlikely that
Beijing will collapse the dollar. It would be a shot in its own
knee,” he said.
At
the moment, the US dollar’s share of the world trade is almost 43
percent, while the yuan has less than two percent. China has
developed a payment system called CIPS for cross-border payments with
the yuan to promote the currency as a global financial instrument.
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