Western currencies losing grip on Russia – deputy economy minister

Russian Deputy Minister of Economic Development, Vladimir Ilyichev, announced at the St. Petersburg International Economic Forum (SPIEF) that the share of the US dollar and euro in Russia’s settlements has significantly declined, dropping from 90% in early 2022 to less than 50% by the end of the year. Ilyichev also predicted that this trend will continue, as more countries worldwide shift away from these dominant currencies due to Washington-led sanctions policies.

The Russian government has actively taken steps to replace the dollar and euro in foreign settlements with other currencies, resulting in a reduction in banking accounts and transactions involving Western currencies. As a result, more than 50% of settlements are now being carried out in rubles and yuan.

The Russian Finance Ministry expects the share of the US dollar and euro to diminish further, potentially reaching 10-15% by the end of the year. In contrast, the share of the ruble in settlements within the Eurasian Economic Union (EEU) has already reached 75% in 2023.

Apart from the EEU and former Soviet countries, other nations such as China and Arab states have also actively shifted away from the dollar. Russia has witnessed a substantial increase in settlements in rupees with India. Economic cooperation with Asian countries, especially China, has been rapidly growing, leading to a record high bilateral trade of $190 billion between China and Russia in 2022. Both countries have set a new trade goal of $300 billion by 2030.

In addition to China, Russia is also in the final stages of a free trade agreement with Iran, which is expected to benefit Russian companies by exempting them from Iran’s high export duties. Russia is also negotiating similar free trade agreements with the United Arab Emirates, Egypt, and Indonesia, projected to come into force in the coming years.

The gradual decline in the share of the dollar and euro in Russia’s settlements, along with the increasing use of national currencies in international trade, marks a significant shift away from the dominance of these Western currencies. As more countries join this trend, the implications for the future of the dollar and euro as global reserve currencies remain uncertain.