Putin’s Making Good On His Promise To Dump The Dollar

Kevin Mwanza
Written by Kevin Mwanza
dollar
Russian President Vladimir Putin is moving forward with plans to reduce his country’s dependence on the U.S. dollar. By Autumn Keiko

Russia is moving ahead with a plan to cut the use of U.S. dollars in international trade as pledged by President Vladimir Putin.

The largest country in the world has started to de-dollarize its economy amid tension between Washington and Moscow.

The U.S. dollar is the world’s largest reserve currency used in most international transactions for commodities such as oil. A growing number of countries including Russia and China are trying to reduce their reliance on the dollar in their trades.

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Putin pledged to reduce the country’s dependence on the dollar following the imposition of U.S. sanctions over its incursions into Ukraine and the use of prohibited nerve agent Novichok in the attempted assassination of a UK-based former spy in 2018.

In October, Putin blamed U.S. sanctions for “singlehandedly subverting confidence in the dollar”.

Russia said in July that it was exploring selling yuan bonds to deepen its financial market connections with China and boost trade in yuan and rubles to counter the dominance of the dollar.

The shift out of the U.S. dollar is likely to benefit other major currencies such as the euro, helping stabilize them and weaken the stance of the American currency as a global reserve.

The euro’s share in payments of Russian exports to China increased tenfold over the year from 0.7 percent in the first quarter of 2018 to 37.6 percent in the first quarter of 2019, according to the Moscow Times.