FX.co ★ Russia and China shift away from US dollar

In a significant shift in global trade dynamics, Russia and China are increasingly conducting their trade transactions using their own currencies, the ruble and the yuan, sidelining the US dollar. According to a report by Business Insider, in 2023, a staggering 90% of trade transactions between the two nations involved these local currencies, marking a remarkable move towards dedollarization. This trend signals a dramatic change from the past, where the US dollar reigned supreme in international trade. The shift is a clear indication of Russia and China's efforts to reduce their reliance on the dollar, a strategy that seems to be paying off. Russian Prime Minister Mikhail Mishustin highlighted this trend as a testimony to the "near-complete dedollarization of economic ties" between Russia and China. Speaking at a meeting with representatives from both countries, Mishustin noted that over 90% of trade between Russia and China is now denominated in either rubles or yuan. Analysts estimate that the total volume of transactions between the two countries has surged to $200 billion since the beginning of the year. Meanwhile, the trade turnover between the United States and Russia has hit a 30-year low. China's efforts to move away from the dollar have been particularly successful. The share of the yuan in global transactions increased from 1.9% in January to 3.6% in October 2023. The People's Bank of China has been instrumental in this shift, having signed bilateral currency swap agreements with 30 leading central banks, including those of Saudi Arabia and Argentina.