VEB Institute: currencies of China, UAE and India can become an alternative to the dollar and the euro
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After the imposition of sanctions against Russia in 2022, settlements in rubles and yuan became widespread, according to analysts, over 70% of settlements between residents of the countries of the Eurasian Economic Union (EAEU) are carried out in the Russian currency, while the Russian Federation pays 23% of its imports in yuan and 16% of exports. However, when paying in rubles, there are risks of secondary sanctions, the institute notes. At the same time, settlements in Chinese currency may increase economic dependence on China.
Settlements in dirhams (currency of the UAE) may also become relevant as an alternative to American and European currencies. The Arab currency has a fixed exchange rate with a hard peg to the US dollar, which is why it can be used to reduce the currency risks of exporters from Russia. The Indian rupee is also noted as a favorable currency for settlements, since in India, for example, there are branches of some large Russian banks. Thus, through the reinvestment of proceeds, this will positively affect the economies of both countries.
However, in mid-April Roscongress Foundation in his report pointed outthat now the position of the dollar in the global economy remains strong: the US currency accounts for about 60% of all foreign exchange reserves, while the yuan – less than 3%. According to the fund’s estimates, alternative currencies to the dollar and the euro may appear on the world market no earlier than 2035-2040.
The yuan and dirham of the Arab Emirates have become more often emphasized among politicians and businessmen as an alternative for the Russian market. September 8, 2022 Alexey Moiseev, Deputy Minister of Finance of Russia declaredthat the Chinese and Arab currencies are considered as an alternative to the “toxic” dollar and euro in the process of devaluation of the Russian banking sector.
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