Russia accelerates its de-dollarization policy, chooses to settle exports in euro over dollar
(Kitco News) Russian efforts to ditch the U.S. dollar are ramping up as the share of Russian exports sold in U.S. dollars have tumbled below 50% in Q4 2020 for the very first time, Bloomberg reported citing the country's central bank data.
More specifically, only 48% of Russia's exports were sold in dollars in Q4 compared to 61% reported in Q4 of 2019. This is the first time the U.S. dollar no longer dominates the bulk of the Russian export transactions.
And the euro is the one benefiting from this shift, with the share of euro transactions up at 36% in Q4 of last year in comparison to 21% reported in Q4 2019.
The catalyst for this change is Russian's trade with China, which is now being conducted with the euro as the primary trading currency. More than three-quarters of Russia's trade with China is now being done in euros, Bloomberg reported.
Russia's President Vladimir Putin has been pushing for de-dollarization in order to strip away American influence over Russia amid increasing tensions and rising sanctions against Russia.
Russia was hit by the latest round of U.S. sanctions in April when the Biden administration introduced limits on buying newly-issued Russian sovereign debt. The U.S. also expelled 10 Russian diplomats and sanctioned a number of entities and individuals. This was in response to reports that Russian interfered with last year's elections in the U.S., specifically the massive "SolarWinds" hack.
On top of ditching the U.S. dollar currency in its export transactions, Russia's central has been increasing holdings of gold and euros in its international reserves while shedding its Treasuries holdings.