SANCTIONS BY U.S. AND EU CREATES RECORD CURRENCY TRADE BETWEEN RUSSIA AND CHINA
Examiner
As the Western led economic sanctions by the U.S. and Europe create ever increasing hardship on the Rouble and Russian economy, the Eurasian power continues to look Eastward as currency swaps with China are at new record levels in the month of October. In a report on Nov. 6 by the Moscow Stock Exchange, direct exchange of currencies between the primary BRICS nations are up 80% month-on-month, and show the extent of the increasing reliance between emerging market countries as Western led governments use economic warfare to pressure Russia into capitulating on issues such as Ukraine and Syria.
Earlier this year, several key agreements were made between the Eastern economic powers to begin the slow process of divesting their financial reliance away from the dollar and U.S. controlled systems. In September, Russia began a new initiative where they would sell oil on the open market in currencies other than the dollar, and support the global exchange of both the Rouble and the Yuan. And just last week, China opened for business the new Asian Infrastructure Investment Bank (AIIB) with the purpose of creating an alternative to the World Bank and IMF, and help borrowing nations function outside the dollar and U.S. hegemony.
The turnover of ruble-yuan currency trades on the Moscow Stock Exchange rose 80 percent month-on-month in October to a historical high of 83.5 billion rubles ($1.8 billion), the bourse said in a statement.
Amid Western sanctions on Moscow for its support of pro-Russian separatists in Ukraine, the Kremlin has looked to build commercial and financial ties with Asian countries, particularly China.
Ruble-yuan trading was launched by the Moscow Exchange in 2010 and its popularity has grown rapidly this year, although it still remains a fraction of dollar-for-ruble sales.
An all-time day record for the quantity of ruble-yuan exchanges occurred on Oct. 16 when 1.5 billion yuan, or 9.9 billion rubles, were traded, according to the Moscow Exchange. - Moscow Times
Many analysts will downplay the significance of only $1.8 billion worth of Roubles being traded between the two Eastern countries in October, but history is quickly showing that when China becomes involved in a new monetary policy, its growth in that program is quite rapid. For example, in just the past five years use of the Chinese Yuan in global trade as a method of payment has increased by nearly 80%, with October's increase alone being a whopping 13.2%. This will only become larger as nation's turn towards the Yuan as an alternative to the dollar in the purchasing of energy from Russia, or finished products from the mainland.
U.S. and European sanctions are creating new unforeseen consequences in the balance of economic power as they are forcing Russia, China, and many emerging markets to accelerate plans to either compete with, or overtake, the current financial hegemony that is controlled by the Western banking system. And with new monetary policies and programs springing up weekly from both Russian and Chinese financial planners, the power wielded by the world's largest energy producer and world's largest economy will be an ever growing force the declining economies of Europe and America may not be prepared to deal with.