Inclination of International Community towards the US Dollar has diminished, claims Central Bank of Russia

Moscow: Elvira Nabiullina, Governor of the Central Bank of Russia claimed that international markets, including Russia, have reduced their disposition towards the US dollar while preferring other currencies like Euro. She also claimed a significant increase in the use of other currencies for international trade. A few months back, Russia had declared to have reduced the US dollar contribution to zero in their National Wealth Fund.

Russian President Vladimir Putin had initiated the process of De-Dollarisation a few years back. He has laid down an aggressive plan to reduce the use of US Dollar in their trade. Russian Oil Companies have been trading in Rubel or other regional currencies with their strategic trading countries. This includes countries like China, European countries as well as Iran.

President Putin had announced to reduce the share of US Dollar in the Foreign Exchange Reserve; accordingly, the Central Bank of Russia has slashed billions of dollars to only 10% from their foreign exchange reserve. Importance is given to trade in local currencies. Hence, central banks have set up mechanics with countries like China and Iran. China has backed Putin’s De-Dollarisation plan. Most of the trade between Russia and China happens in Rubel or Yuan.

In this backdrop, comments by Elvira Nabiullina, Governor of the Central Bank of Russia, are noteworthy. She stated that Central Bank of Russia has reduced the share of US Dollars from its Foreign Exchange Reserve and National Wealth Fund. She claims that the US dollar is depreciating against other foreign currencies. Many countries prefer to trade in local currencies. Efforts are being made to increase the share of the Euro for international trades.

Elvira Nabiullina does not expect this to happen immediately but over the next few years. She highlighted the decline of the British Pound, which was once the world’s reserve currency. The use of the US Dollar in Russia and China has dropped by 50%. However, Yuan has increased by 17%. Last Month, Global Times, the Chinese mouthpiece, claimed that rebuilding Afghanistan could further strengthen the De-Dollarisation process.