Kremlin’s de-dollarisation drive bearing fruit

Russia is selling less than half of exports in dollars

Kremlin’s de-dollarisation drive bearing fruit

The US currency is losing ground as a means of payment in Russian exports. At the end of 2020, the dollar fell below 50% in Russia’s export mix, mainly due to the increased use of the euro in Sino-Russian trade.

The share of Russian exports sold in US dollars has fallen below 50% for the first-ever time, says The Moscow Times citing the Central Bank’s data analysed by Bloomberg. In the last quarter of 2020, the dollar accounted for 48% of Russia’s exports. Meanwhile, in the fourth quarter of 2019, the share of the US currency amounted to 61% of the country’s export mix, and as far as in 2013, Russia received 80% of its export earnings in dollars.

The decline is a result of the Kremlin’s long push for de-dollarisation. The imposition of Western sanctions in 2014 prompted the Russian government to intensify its efforts to move away from the dollar. Since then, big state-controlled exporters have renegotiated contracts to reduce the country’s reliance on the US currency. Namely, Russia’s trade with China has seen a complete reversal in the position of the dollar and euro. The latter is now used as the trading currency in three-quarters of all Russia’s exports to China, while at the beginning of 2018, it accounted only for 1% of the trade. The combined share of the two currencies within Russia’s export mix has largely remained at the same level since 2013. The national currency, the ruble, accounted for 14% of Russia’s exports in the fourth quarter of 2020.

The euro is now used as the trading currency in three-quarters of all Russia’s exports to China. Photo: Huepang2012

In recent years, Russia has also reduced the dollar’s share within its government reserves. Besides, the government is making efforts to promote domestic alternatives to banking systems such as SWIFT and payment providers like Visa and MasterCard. During his recent visits to Iran and China, Russia’s Minister of Foreign Affairs Sergei Lavrov raised the issue of continuing to move away from the dollar.

Earlier in April, Deputy Minister of Foreign Affairs Alexander Pankin said that countries in the Asia-Pacific region as well as in Africa and Latin America had expressed interest in Moscow’s proposal to use alternative currencies for payment settlements. “Russia is developing enhanced cooperation on the matter with its partners from the Asia-Pacific region, where the readiness to switch to mutual settlements in national currencies or other currencies apart from the dollar is quite high,” he said.

By Anna Litvina