The euro is rapidly gaining popularity in trade between Russia and China. This is evident from new statistics released by the Russian central bank earlier this week. Russia is also settling an increasing share of trade with other BRICS countries in euros instead of dollars. In trade with European countries, the dollar also seems to be slowly losing the lead.
In the first quarter of this year, the euro represented a market share of 37.6% in Russian exports to China, compared to just 0.7% a year earlier. The market share of the dollar fell during the same period, from 87.8% to 45.7%. These numbers confirm a trend we have been observing for some time, namely that Russia is switching to the euro as international trade currency.
Russia is switching to euros
In recent years we have written several articles about Russia’s intention to reduce their dependency on the dollar. According to Russian President Putin, the United States uses the dollar as a political weapon, imposing sanctions and closing countries off the dollar system. For that reason, Russia wants to reduce its dependency on the US currency.
Earlier this year at the St. Petersburg Economic Forum, the Russian president stated that it is time to review the role of the dollar. He said that international financial organizations must adapt to a world in which new economic centers are emerging. The euro in particular seems to benefit from this development as the second largest currency in the world.
International role of the euro
Russia is not alone in adopting the euro as an alternative to the dollar, this desire has also been cherished in European circles for years. The President of the European Commission Jean-Claude Juncker also strives for a more prominent role for the single currency. He complained that European countries are still paying for imports of oil and gas in dollars. The ECB also supports the initiative to strengthen the international role of the euro.
The dollar is still the most important trading currency and reserve currency in the world, but these statistics confirm that countries are slowly moving away from the dollar. The euro is seen by more and more countries as an alternative, certainly now that the United States is using their dominant position with the dollar to put pressure on other countries.
The graphs below show the currencies in which trading partners pay for goods and services they import from Russia. The first graph relates to trade with the European Union, while the second and third graph show trade with China and the BRICS. The last graph gives an overview of the currency composition of total Russian exports.
This article has also been published in Dutch
Euro gains market share in Russian exports to European countries
Russia switching to euro in trade with China
Russia is receiving more euros for exports to BRICS
Market share of the dollar in total Russian exports is decreasing