[Marxism] Russia switches to Chinese currency for oil sales; dumps the petro dollar
dwaltersmia at gmail.com
Wed Feb 3 09:06:33 MST 2016
This is from a Russian "news" outlet so buyers beware. But it's an
interesting development and I was wondering what people thought of this.
This represents the long running desire of the Chinese (and also Russian)
governments to break out from reliance on the US Dollar for international
trade, especially with regard to crude oil purchases. However, they have to
be careful not to effect a lowering of value of the USD both because of
their ownership of US debt but also directly with regards to the ability to
keep their currency lower in value to facility the international trade of
their own commodity export industry.
Goodbye Petrodollar: Russia Accepts Yuan, Is Now China's Biggest Oil Partner
Russia reaps the rewards of dumping the dollar
Russia is now the top crude exporter to China
the largest (or second largest, depending on whom you ask) oil demand
growth country in the world.
At the start of the decade, Saudi Arabia enjoyed a 20% share of Chinese
crude imports, while Russia was lagging far behind with 7%. Now the Saudis
find themselves neck and neck with Moscow for the lead in Chinese market
share, with both performing in the 13-16% range. But Russia's share
continues to rise, as The Kingdom struggles to maintain a foothold.
Why? Analysts attribute Russia's huge market share growth to its
willingness to accept yuan, while Saudi Arabia is still clinging to
blood-soaked dollars. As Business Insider notes:
Interestingly, part of Russia's success in China has been attributed to *its
willingness to accept Chinese yuan denominated currency
for its oil*.
This is consistent with earlier forecasts about Russia's market share in
China. Bloomberg reported back in July
“*Following Russia’s recent acceptance of the renminbi as payments for oil,
we expect more record high oil imports ahead to China*,” Gordon Kwan, the
Hong Kong-based head of regional oil and gas research at Nomura Holdings
Inc., said in an e-mail, referring to the Chinese currency. “If Saudi
Arabia wants to recapture its number one ranking, *it needs to accept the
renminbi for oil payments instead of just the dollar*.”
As both the head of the Eurasian Economic Union (and founding member of
BRICS), as well as a major energy exporter, Russia is leading the charge
against the dollar. And now other nations are following suit: Iran and
India announced last month
that they intend to settle all outstanding crude oil payments in rupees, as
part of a joint strategy to dump the dollar and trade instead in national
The dollar is slowly losing its privileged place in international
transactions. What this means for the United States is anyone's guess.
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