Russia favors trade with all countries using national currencies not US dollar

Russia said last Monday that it favors bilateral trade with all countries using their national currencies rather than the US dollar. However, Russian authorities say the idea needed more work before it could be implemented

There has already been several moves by Russia to use currencies other than the dollar in international trade. Back in June Russia and China came to an agreement: "Moscow and Beijing have agreed to raise the share of ruble-yuan trade settlements, in a joint agreement signed by Russian President Vladimir Putin and Chinese leader Xi Jinping..The document envisages “further strengthening of the Russian-Chinese cooperation in the financial sector, promoting increase of the share of national currencies in trade payments, investments and financing, expanding collaboration in such fields as payment systems and insurance.” " The move is partly in response to US sanctions.

Turkey also to use national currencies in trade

Turkish President Tayyip Erdogan also announced just recently that the country was preparing to conduct trade through national currencies with China, Russia, and Ukraine. The move comes amid increasing tariffs and sanctions by the US against Turkey. The moves have resulted in a huge drop in the value of the Turkish lira.

The Turkish lira sank to a fresh to low of 7.24 to the dollar in early Asia Pacific trade last Monday. Investors are worried over the state of the Turkish economy and deteriorating ties with the United States. The lira has dropped over 40 percent against the US dollar so far this year. There is a deepening diplomatic row over a jailed American pastor. President Erdogan has described the lira's fall as the consequence of a plot not economic fundamentals. He also described spreading false news about the economy as treason and recent U.S. actions as a stab in the back against Turkey.

Spokesperson for the Russian government Dmitry Peskov said that Russia was pushing for this type of arrangement with all countries and that the issue had been raised on several occasions during bilateral talks with Turkey and Russia.

For decades the world's currency of record has been the US dollar. Even countries that don't use the dollar as their currency nevertheless conduct business in the US dollar in a roundabout way. Increasing sanctions against Russia make the use of local currencies much more convenient as access to US dollars becomes more difficult or in the case of trade with countries such as Iran almost impossible.

Previously published in Digital Journal