The exchange rate for transactions with ‘friendly’ countries is still calculated through the greenback
Moscow is looking for ways to unpeg settlements with foreign partners from the US dollar, RBK reported on Saturday, citing sources in the financial market and the government.
Russia has stepped up efforts to switch international settlements to national currencies after a number of Western nations placed sanctions on the country earlier this year in connection with the conflict in Ukraine. As sanctions jeopardized Russia’s transactions in euros and the dollar, these currencies have been deemed compromised.
However, the exchange rate used in cross-border trade in local currencies is still calculated through the dollar. For example, when determining the ruble-tenge rate, the rate of the Kazakh currency is calculated through the dollar to determine the ruble price of a tenge and vice versa.
RBK’s sources say that Russia’s Central Bank and Finance Ministry are now working together with banks on a mechanism that would allow Russia to set prices for foreign contracts using new indicators that don’t take into account the dollar exchange rate.
One way is to create a basket of currencies that would presumably be pegged to one another. Another option is to introduce a new payment unit for foreign trade contracts, the value of which would be pegged to commodities such as gold and other precious metals. In that case, the exchange rate world depend on the average prices of these commodities in global markets.
A third option on the table is simply to peg the national currencies to gold or oil. However, this may also be problematic because both oil and gold are priced in dollars.
One source told RBK that the exchange rate in foreign trade contracts could be calculated using the Chinese yuan instead of the dollar, as China has not sided with the West in the sanctions war against Russia. However, the yuan is not a freely convertible currency and Beijing’s consent would be required for the mechanism to be implemented.
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