Russia Settles Majority of Trade Debt with China in Euros for First Time
- De-dollarization is increasing as Russia-China trade is growing
- Russia has the world’s 4th largest foreign currency reserves; China is 1st and United States 21st.
Russian exports settled in US dollars fell below 50% for the first time in the last quarter of 2020, according to the Russian Central Bank. Russia is continuing its efforts to wean off its use of the US dollar amid an acceleration of US sanctioning measures against Kremlin.
The plunge was mostly attributed to Russia’s decision to conduct the bulk of its trade with China in Euros. More than three-quarters of Russia’s trade with China is now settled in Euros, while the Euro share of Russia exports rose more than 10 percentage points to 36 percent, according to the data.
China’s trade with Russia jumped 15.4% year-on-year to reach US$29.26 billion in the first three months of this year, with Chinese exports to Russia soaring 42.7% year-on-year to hit US$13.06 billion, according to the Chinese Ministry of Customs. If sustained, this would mean that Russia-China bilateral trade is on course to rise by about 30% in 2021.
Russia’s Central Bank has also offloaded its holdings of US government assets in its international reserves, while increasing gold and euro holdings.
De-dollarization remains a theme with Russia and China exploring ways to end reliance on the currency, a concept shared by numerous other nations in what is often seen as US use of the Dollar as a weapon in trade sanctions against countries that do not comply with Washington’s wishes. According to data released by the IMF, Russia now holds more gold in reserves than it does USD, and as from April 23 now possesses the world’s fourth largest foreign currency reserves after China, Japan, and Switzerland. The United States ranks in 21st place, behind countries such as Thailand, Italy, and the Czech Republic.
Related Reading
- Russia Swaps US Dollar for Chinese RMB; Holds 25 Percent of Global Reserves
- Why Are Russia’s Surging Gold Exports being Stockpiled in the United States, and not China?
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