This Monday, the Group of the Seven Most Advanced Economies in the World announced it categorically refuses to pay for Russian oil in rubles as required by Russia. It proves the extent to which the dollar retains its extraordinary strengthas it is the currency of the oil markets and of an overwhelming majority of commodities and financial products.
Other countries, however worried about seeing how far the US currency has become a weapon of war able to destroy their economies, they try to find an alternative, though so far without much success.
The rupee as an alternative to Russian crude oil imports
The Indian Foreign Minister raised the possibility of studying a rupee-oil exchange facility to import Russian fuel. However, this was denied by the Minister of Energy before Parliament on Monday. Despite being denied, however, the idea began to sink in.
Oil fell sharply due to the reduction of Russian military operation in Ukraine
Iran’s oil minister has offered New Delhi the offer in rupees or rials, the Iranian currency. China already pays part of its Russian imports in yuan or rublesand you still have room to increase that portion of the payments.
There are even more wonderful practices. Saudi Arabiaa major ally of states in the Gulf region, has made it clear that in the coming days price your oil in yuan. The Saudis and the Chinese have been dealing with this issue for six years now.
In the context of sanctions against Russia, these conversations intensified. And commercially it makes sense.
The Chinese case
China buys three times more oil from Saudi Arabia than from the United States. The Asian giant absorbs 20% of the kingdom’s exports. But Riyadh also has a privileged relationship with Washington and a currency to preserve: the rial is pegged to the dollar and a quarter of the central bank’s reserves consist of treasury bondsthat is, American debt.
Russia announces “de-escalation” of military operations in Ukraine
the crown prince, Mohamed Bin Salmanmust weigh the pros and cons before moving on in its monetary approach to Beijing.
Can the yuan displace the dollar?
This is the idea of Beijing. To achieve this, China has the full weight of its economy and trade with the rest of the world. But until the Yuan can not be freely convertedit will not be able to assume the role of the US currency.
To build trust, the Central Bank will have to be completely independent, which at the moment looks very far in China. The yuan is therefore far from being a credible or immediate alternative to the dollar.
Russia offers to buy back Euro bonds until 2022 and pay in rubles
However, the Chinese currency has growing influence. Especially with the projects it finances within the framework of the His path. Currently, about fifteen African countries have yuan in their reserves.
Is the dollar losing weight?
According to a report by the International Monetary Fund (IMF), the erosion of the dollar began 20 years ago. The share in dollars in foreign exchange reserves went from 70% to 60%. That decline did not do much for the yuan, which accounts for only a quarter of altcoins.
The rest consists of currencies you consider safer such as the Canadian dollar, the Swedish krona or the South Korean won.
Source: rFI
SE / LR
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