In response to the ongoing de-dollarization efforts, Russia, a key member of BRICS, has announced that it will switch from the US Dollar to the Chinese Yuan for its trade activities. The decision, made public by Russia’s central bank, is seen as an essential step in the country’s pursuit to eliminate its dependence on the US dollar.
This announcement came in tandem with several other measures taken by the Central Bank of Russia (CBR) recently. Amid the latest round of US sanctions on the country due to the Ukraine conflict, the Moscow Exchange (MOEX) has decided to halt trading in US dollars and euros. The central bank stated that this decision was influenced by a shift in trade flows towards the East and a corresponding change in the currency of settlements to rubles, yuan, and other currencies.
The Central Bank of Russia postulated that this would shape the trajectory of other currency pairs, setting a benchmark for market participants as the yuan/ruble exchange rate takes center stage.
Meanwhile, the US Treasury has expanded its sanctions to include over 300 Russian entities in its attempt to target the country’s foundational financial infrastructure.
The entire BRICS alliance has been actively pushing to de-dollarize the global economy. This focus emerged from the growing politicization and weaponization of Western currencies. As a result, the bloc has managed to appeal to numerous other nations expressing interest in abandoning the US dollar.
Recently, Russia, along with the entire BRICS bloc, decided to settle trade using local currencies such as the Chinese Yuan. This landmark decision signaled an end to the necessity for the US dollar in trade settlement. This agreement involved all members of the BRICS alliance along with six other non-member countries.
Additionally, under the new directives from the Russian Central Bank, banks and investors are prohibited from trading U.S. dollars through a central exchange. They are instead required to conduct over-the-counter transactions directly between two parties.
