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Russia's Switching to Euro. The Process of De-dollarization in the Foreign Trade
August 16, 2019 00:41


(Source: https://www.forbes.ru/finansy-i-investicii)
Amid the desire to reduce dependence on the dollar, the share of settlements with major foreign trade partners in euros is growing significantly.

“I think the task should be set deeper - the de-dollarization of the global economy.” -  Andrei Kostin the VTB Head said at the International Financial Congress in St. Petersburg last summer. It was he who spoke out most actively for de-dollarizing the financial sector of Russia, and prepared a draft of proposals to the Russian President aimed at further expanding  of the use of the ruble in international payments.  Having  analyzed the statistics of the Central Bank for the first quarter of 2019, Bloomberg Agency  came to the conclusion that the role of the dollar in settlements with large foreign trade partners really decreased.

In general, the role of the dollar for Russian foreign trade is still significant. In the total foreign trade turnover of Russia ($ 687.5 billion), the American currency accounts for more than half of the calculations. Nevertheless, as the head of the Ministry of Finance, First Deputy Prime Minister Anton Siluanov, noted in December 2018, Russian companies were trying to abandon the use of dollar, since up to a third of dollar payments are delayed due to sanctions.

Amid the desire to reduce dependence on the dollar, the share of settlements in euros is growing significantly. The European currency has almost surpassed the dollar in settlements with the European Union and China. In settlements with the EU for Russian exports, the share of the euro for the year increased from 32% to 42%. As regards settlements with China, Russia's largest trading partner, the share of payments in euros for Russian exports for the year increased from 0.7% to 37.6% (the share of the dollar, in turn, fell below 50% to 45.7%).

Settlements in national currencies also increased, but not significantly. “Foreigners have limited access to the domestic financial market; it is not so easy to buy domestic Chinese securities. The yuan is not a fully convertible currency and therefore cannot play a significant role in the world trade,” Dmitry Timofeev, the head of the Ministry of Finance’s department for monitoring external restrictions, said in an interview with RBC. “Russia cannot single-handedly switch to settlements in national currencies, this should be supported by partner countries, therefore coordination at the international level and assistance from the governments of partner countries is required,” he explained.

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At the same time, settlements in national currencies are actively carried out with India, and the trade turnover is about $ 11 billion. 75% of Russian exports are paid in rubles (21% a year earlier). Recently, countries completed the coordination of the mechanism for calculating in national currencies for the supply of Russian weapons.
 
 



Author: Anna Dorozhkina

Tags: Russian business Russian economy Russian companies   

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