Trade between Russia and China will no longer involve the United States of America dollar, a development made public by the two nations Wednesday. Trade officials from the two nations announced the transfer as they met in St. Petersburg to work on Trade issues and energy deals. United States currency exchange is not expected to be affected and the transfer could expose the yuan to global industry forces that determine the value of other currencies.
China and Russia opt-out of using the U.S. dollar for bilateral transactions
China, Russia and the dollar formally ended a long relationship Wednesday. Russia and China have had to use a third party currency to negotiate transactions of trade due to their fragile relationship. Last year their trade was estimated to be valued at $ 38.8 billion with the use of the American dollar as their third party trade price. These two nations will have an estimated $ 60 billion value by the end of the current year. The two countries have decided to use rubles or yuan when trading with each other from here on out.
Motivating factors behind this dollar change
The Chinese stock exchange already recognizes the Russian ruble. The Chinese yuan is expected to start trading in Moscow in December. International Business Times reports that this change has nothing to do with America. Because of the global financial crisis this is just a step to protect both countries and their trade with each other. The largest contributing factor is really probably nothing more than a Russia-China oil contract. China is about to get 1 billion barrels of oil from Russia via a Siberian pipeline. Russia wants the exchange to be in rubles for the oil.
Money exchanged internationally present some problems
Nothing is going to change with the dollar and how it impacts International trade. According to Joe Weisenthal at Business Insider, China and Russia switching to yuan and rubles for bilateral trade is something the world has been waiting for. China has been able to manipulate the yuan for some time, and America is happy that this should stop that from taking place any longer by giving the yuan a specific value on the trade market.
Citations
International Business Times
ibtimes.com/articles/85216/20101124/china-russia-dollar-vladimir-putin-wen-jiabao-ruble-yuan-bilateral-trade.htm
Business Insider
businessinsider.com/china-and-russia-drop-dollar-for-bilateral-trade-2010-11
NASDAQ
community.nasdaq.com/News/2010-11/china-russia-open-up-nondollar-trading.aspx?storyid=46466
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