(ORDO NEWS) — 50.8% of all exports from Russia to China in the second quarter of this year were paid in euros. This is evidenced by the latest statistics from the Russian Central Bank. Thus, the European currency crossed the 50 percent mark for the second time. This happened for the first time last year. Then the share of the euro in the market decreased slightly, but now for the fourth quarter in a row the euro is ahead of the dollar.
At the same time, we are talking about considerable amounts: last year, Russia exported goods and services to China for a total of 48 billion euros. This figure has been growing for several years in a row, as China is looking for new partners due to the trade war with the United States.
The value of the euro is growing in trade with the EU
On the other hand, Russian President Vladimir Putin a few years ago announced a policy designed to reduce the dependence of his economy on the dominant dollar around the world. Thus, Russia seeks to make itself even less vulnerable to the sanctions imposed against it after the annexation of Crimea and the outbreak of war in eastern Ukraine.
Although the EU has imposed sanctions against Russia for the same reason, the Russians seem to put up with it. Thus, the importance of the euro in their trade with the EU has increased recently.
However, oddly enough, here in euros are calculated for fewer goods than in trade with China: in the second quarter, this figure was 43 percent, although there was an increase of 5 percent compared to the beginning of the year. The dollar is slightly ahead of the euro here: its share is 44.9 percent.
But most likely, oil and gas giant Rosneft is almost exclusively responsible for the growth of the euro’s share in trade with China. The concern now issues invoices not in dollars, but in euros. Oil, gas, coal and their derivatives such as gasoline account for 75 percent of Russian exports to China.
The US dollar continues to dominate the world
But business between Russia and China has no influence on world trade. On the contrary, the share of the US dollar in world trade even increased slightly from 87.6 to 88.3 percent between 2016 and 2019. However, there are signs that the value of the US currency may decline.
In addition to Russia, other countries have switched to settlements in euros or are planning to do so. So Iran has been invoicing its oil in euros for a couple of years now – also in order to get around US sanctions. China is working hard to make its yuan one of the world’s currencies.
To this end, the Chinese Central Bank has opened branches in 25 countries, including Germany. But progress has so far been modest: in London, only 6 percent of financial transactions are made in yuan. And only 60 countries of the world have created reserves in yuan.
The time when the dollar will really cease to be the world currency will probably not come soon. But for the United States, this will not only be a blow to prestige, but also to influence in the world. Sanctions against other countries, such as Russia or Iran, are being successfully implemented also because these countries depend on the dollar.
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