/ world today news/ The share of the ruble in foreign trade reached 40%. The “toxic” dollar and euro make up less than a third, and were recently almost 90%. In particular, third-party currencies were almost completely abandoned in trade with China. And this course will continue. Read about its advantages and objective risks in the article.
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The West’s freezing of almost half of Russia’s international reserves and unprecedented sanctions have sharply accelerated the transition to payments in national currencies.
“As of September this year, this is the picture: the ruble is 40 percent, the yuan is 33, the combined use of the dollar and the euro is 24 percent,” Vladimir Putin said at the closing press conference.
For comparison: in 2021, the dollar and the euro were 87%, the ruble – 11-13, the yuan – 0.4.
Within the Eurasian Economic Union, national currencies now predominate – more than 90%. The circle of trading partners of the EAIS countries is expanding. We have signed a free trade agreement with Iran and are strengthening ties with the UAE, Indonesia and Egypt.
The ruble dominates the EAIS. The countries of the former USSR, friendly to Russia, recognize it as the most liquid currency in the post-Soviet space, notes Alexey Androsov, head of the treasury of “RosDorBank”.
In mutual payments with the PRC, national currency units account for 92%. Moscow and Beijing have built a highly effective system of trade and economic interaction that is independent of the West, Deputy Prime Minister Dmitry Chernishenko pointed out.
Away from the risks
China, India, Turkey, Azerbaijan – the list goes on. Payments other than dollars and euros eliminate the risks associated with making foreign economic payments.
“Independence from political and sanctioning factors is increasing. This is also manifested in the transition to alternative reserve currencies, above all the Chinese yuan, whose share in international trade has increased significantly, and in 2023 it will completely displace the euro from second place in transactions in the system SWIFT,” says Ismail Ismailov, Associate Professor of the Department of International and Public Law at the Faculty of Law of the Financial University of the Government of Russia.
According to data from the Federal Customs Service, foreign trade turnover for January – September amounted to 530.2 billion dollars, of which exports – 316.9 billion, imports – 213.3. About 70% are from Asian countries.
“In such conditions, the euro and dollars are absolutely unprofitable, exchange rate differences arise that must be absorbed. And sanctions interfere. It is easier to use the national currency,” explains investment advisor Yulia Kuznetsova.
Referral to CIS
As for turnover within the Commonwealth of Independent States, the share of local currency there is 85%. In 2024, Russia will chair the organization – and this figure will only grow. Which, as Putin emphasized, will strengthen the financial and economic sovereignty of the CIS countries.
“Conscious efforts to weaken the hegemony of the dollar and the euro make it possible to form an economy independent of the West. Ruble reserves are useful for everyone in the CIS,” believes Oleg Vorobyov, a member of the General Council of Business Russia.
The fact that Moscow receives tenge, Belarusian rubles, soms, drams and rupees is more for the future, he adds.
Excess and insufficient liquidity
There are, of course, problems. Companies are hoarding excess currencies that are much less liquid than the dollar and euro. This creates an imbalance.
“The share of the ruble has increased mainly due to exports. It is worse with imports. The currencies of friendly countries also create difficulties, as there is nothing special to spend on, and making them more liquid creates difficulties, which leads to a discount “, explains Mihail Bespalov, an analyst at the company “KSP Capital”.
This is the case in particular with India, from where Moscow receives approximately $70 billion in illiquid rupees.
“A number of national currencies are characterized by high volatility (say, the Turkish lira) and limited convertibility (the yuan and the Indian rupee). Such mutual payments can be accompanied by a weakening against the dollar/euro – the initial price of many goods is still determined in them. This requires additional measures and instruments (for example, export crediting)”, says Roman Feinschmidt, an expert on East and Southeast Asia.
Thus, the need for dollars and euros still remains – to maintain the stability of reserve funds and quick conversion to the desired currency.
The dollar and the euro not only have reserve status, but are also freely convertible. In addition, US money is the basis for the functioning of many markets in the global economy, and some technologies and equipment are only available in unfriendly jurisdictions due to “toxic” currencies, the analyst added.
Single currency
According to experts, risks can be minimized by creating a currency zone – when cooperating countries agree to accept their partners’ money.
In addition, in the future, a dominant reserve currency (probably ruble or yuan) is needed to integrate all calculations, says Yevgeny Smirnov, head of the Department of World Economy and International Economic Relations at the State University of Management. Such a currency must first of all be stable.
BRICS members, which will be joined next year by six more countries, are already discussing this. The single currency will stimulate the growth of trade turnover in the organization and reduce transaction costs. However, this is not a matter of the near future.
Translation: V. Sergeev
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