Russia and China have begun trading one another’s currencies in a move that reflects growing calls from Moscow and Beijing to reduce the dollar’s dominance as the global reserve currency.
The Chinese yuan began trading on Moscow’s Micex currency exchange mid-month, just weeks after the rouble began trading in Beijing. The steps will enable the two emerging economies to deal directly with each other in local currency.
“I don’t expect to see a huge trading volume for this currency pair,” Micex president Ruben Aganbegyan said. “But a journey of a thousand miles begins with a single step.”
Traders agreed the move would develop gradually. “It will take six months to a year to bring a float to the pair and it will take clients a long time to get used to it,” said Vladimir Demishev, a forex trader at Troika Dialog. “But in the long run both currencies will be market makers.”
The rouble is the seventh currency traded against the yuan, and the second from an emerging economy after trading in the Malaysian ringgit began in August. They join the US dollar, Hong Kong dollar, yen, euro and sterling.
President Dmitry Medvedev has repeatedly promoted the use of regional reserve currencies as a way to offset the influence of the dollar and euro, while Wen Jiabao, the Chinese prime minister, said in March he was “worried” about holding assets denominated in the greenback.
Both countries are unhappy that their export-led economies are so exposed to fluctuations in the US currency, a complaint emphasised by the latest round of quantitative easing from the Fed. For its part, Washington’s complaints against the yuan’s trading level has led the recent currency war, while reports claim the Central Bank of Russia is surreptitiously suppressing the rouble while talking up its neutrality. China is also the biggest holder of US Treasuries.
Currently, the dollar accounts for 47pc of Russia’s international currency reserves, while the euro accounts for 41pc, sterling for 10pc and the yen for 2pc.
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