Russia, which had to move away from the use of dollars and euros due to sanctions, wants to evaluate the currencies of friendly countries such as the Turkish lira, yuan and rupee in order to strengthen its reserves.
After the start of the Russia-Ukraine war, Western countries froze about $300 billion of the international reserves of the Russian Central Bank, worth about $600 billion, in foreign banks.
The Kremlin had to instruct exporters to convert their foreign exchange earnings into rubles, as it began implementing extensive capital controls in the country as it was denied access to a significant portion of its reserves.
Russian President Vladimir Putin, on the other hand, defined all countries that impose sanctions on his country as “unfriendly countries” and said that these countries can now buy various Russian products, especially natural gas, with only rubles.
In Russia, whose economy was in crisis due to the sanctions, the dollar/ruble parity increased by 70% to the level of 120, while the Moscow administration managed to reduce the dollar/ruble parity back to the 60 band thanks to the capital controls and the new ruble payment system announced by Putin.
The Central Bank of Russia announced that the use of dollars and euros now carries risks, so it will help accelerate the process of moving away from these currencies and will introduce additional measures to reduce banking transactions in such currencies.
However, Russian officials and experts are looking for a solution on the grounds that, in addition to comprehensive sanctions, the interventions in question significantly damage the competitiveness of Russian companies in domestic and foreign markets.
Russia wants to move away from the euro and the dollar in the domestic market
The idea of using friendly countries’ currencies as an alternative to the use of the dollar and the euro in order to get the Russian economy back on track has been gaining popularity recently.
In the report published by the Central Bank of Russia in August, it was emphasized that the issue of using the currencies of friendly countries more in reserves in order to have an effect on the ruble with the currencies of foreign countries was examined.
According to the report, the Ministry of Finance of Russia has started working on the implementation of an operating method for the renewal of the National Welfare Fund and the budget rule method for the currencies of friendly countries such as Turkish lira, yuan and rupee.
Russia’s reserves in the National Welfare Fund increased by 1.4 trillion rubles in July to 12.1 trillion rubles (about $201 billion), while half of the fund consists of non-friendly countries’ currencies.
While there are no dollar reserves in the fund, 40% is kept in British pounds, 10% in Japanese yen, 30% in yuan and the rest in gold and rubles.
Kremlin plans to increase the use of national currency in foreign trade
Russia wants to restructure its international reserves and move away from the dollar and euro in trade.
Russian President Vladimir Putin, in his statement on April 18, stated that the transition to trade in national currencies should be accelerated, “We must give maximum support to the business world, including accelerating the transition to trade in national currencies with reliable trading partners.”
The most concrete step taken in the said process is seen as Russia’s acceptance of payment in rubles instead of dollars or euros for the natural gas it sells to Europe.
In the report published by the International Payment System SWIFT in August, it was reported that Russia became the third country to use the yuan in international payments with a 4% share. Russia was not previously on the list of countries that used the yuan the most.
On the other hand, as the trade volume between Russia and China increased, the share of the yuan in the said trade increased from 3.1% in 2014 to 17.9% in 2021.
In the news in the Indian press, it was reported that negotiations were carried out especially for the payment of Russian oil in rupees due to the sanctions of Western countries.
Source: Trthaber / Translated by Irem Yildiz