The reserve currency position of the Russian ruble is strengthening as countries turn away from the dollar due to US financial restrictions, Russian President Vladimir Putin said on Thursday during his annual Q&A session.
The role of Russia’s national currency will continue to grow, especially in payments between members of the Eurasian Economic Union (EEU), Putin told journalists. The Russian president gave an example of cross-border payments between EEU members Russia and Belarus, nearly 70 percent of which are in rubles.
Answering the question about Russia’s effort to reduce the role of the US dollar in its economy, Putin admitted that the US currency has a greater role in Russia than globally, because many national exports – such as oil and gas – are traded in dollars. Putin quoted International Monetary Fund data, revealing that the number of global operations in US dollars has dropped slightly from around 63 to 62 percent, but in Russia they amount to 69 percent.
The Russian president added that the so-called de-dollarization in Russia only affects operations between organizations and will not affect the right of the people to own and trade dollars.
Russia still needs to decrease volatility of its national currency and to develop a stronger financial infrastructure, according to Putin.
Earlier, one of the members of the EEU, Kyrgyzstan, suggested the bloc should abandon border procedures and adopt a common currency like the European Union did.
Some countries have already started ditching the dollar in favor of local currencies. Earlier this month, India and the United Arab Emirates (UAE) sealed a currency swap agreement to boost trade and investment without involvement of a third currency. New Delhi is also in talks with Moscow over a similar deal. In October, China and Japan sealed a cross-currency trade agreement, which will last until 2021.
Some countries, including Argentina, Turkey, Iran and Iraq, among others, are still considering the opportunity to turn away from the dollar in bilateral trade.