The Ruble: The New Alternative to the Dollar?
The Emergence of the Ruble in International Trade
Since the invasion of Ukraine in 2022, Russia has faced an unprecedented wave of sanctions from the West. Financially isolated, the Eurasian nation was forced to look for new routes and allies to sustain its economy. This need has led the ruble to occupy a leading place in international transactions, especially in trade agreements with countries in Asia and the Middle East.
One of Russia's boldest moves has been to demand that energy transactions with "unfriendly countries" be conducted in rubles. This measure not only strengthens the national currency, but also challenges the hegemony of the dollar in global energy trade. China, for example, has increased its bilateral agreements with Russia in rubles, minimizing its dependence on the dollar and solidifying a strategic alliance with Moscow.
A Multipolar World: Monetary Diversification
The trend towards diversification of reserve currencies is not an isolated phenomenon. Globally, there is growing interest in reducing dependence on the dollar, often seen as a tool of American political influence. Central banks in several countries have begun to increase their reserves in currencies such as the euro, the Chinese yuan and, of course, the ruble.
India, another emerging economic giant, has shown interest in using the ruble for bilateral trade with Russia. This movement not only challenges Western sanctions, but also promotes greater economic and political cooperation between the BRICS (Brazil, Russia, India, China and South Africa).
The Future of the Ruble in the Global Financial System
The crucial question is: Can the ruble really challenge the dollar in the long term? Experts are divided. On the one hand, the Russian economy remains vulnerable, with a high dependence on oil and gas exports. Western sanctions have caused significant damage, and the lack of economic diversification is a major obstacle.
However, the impact of current strategies cannot be ignored. Russia's insistence on using the ruble in its international transactions has boosted demand for the currency and helped stabilize it, despite sanctions. In addition, growing cooperation with countries not aligned with the West creates an environment conducive to the expansion of the ruble in global trade.
Several nations currently trade rubles, especially in the context of economic sanctions imposed on Russia and the country's effort to reduce its dependence on the US dollar. Below are some of the nations that have increased or established trade with Russia using the ruble:
China: China and Russia have strengthened their economic and political ties in recent years. Both countries have agreed to conduct a significant portion of their bilateral trade in rubles and yuan, including important sectors such as energy and manufactured goods.
India: India has shown interest in using the ruble for its commercial transactions with Russia, especially in the purchase of energy and defense products. This interest has increased due to Western sanctions and the need to find alternative financial mechanisms.
Turkey: Turkey has established agreements with Russia to carry out certain commercial exchanges in rubles, especially in sectors such as energy and tourism. This financial cooperation is part of a broader effort to diversify the currencies used in bilateral trade.
Iran: Iran and Russia have increased their economic and trade cooperation, using the ruble in various transactions to avoid restrictions imposed by US and European sanctions.
Kazakhstan: As a member of the Eurasian Economic Union (EEU), Kazakhstan has close trade ties with Russia and uses the ruble in many of its trade transactions within the regional bloc.
Belarus: Belarus, another member of the EEU, conducts a considerable portion of its trade with Russia in rubles. The close political and economic relationship between both countries facilitates this type of agreement.
Vietnam: Vietnam has increased its trade with Russia using the ruble, especially in the energy and agricultural products sector, as part of its efforts to diversify its trade and financial relations.
The rise of the ruble as a possible alternative to the dollar reflects a significant shift in global geopolitics. While the dollar remains the dominant reserve currency, the resilience and adaptability of the ruble show that the global financial landscape is far from static. In an increasingly multipolar world, monetary diversification is not just a possibility, but a developing reality.
References
https://www.bloomberg.com/quote/USDRUB:CUR
https://www.npr.org/sections/money/2022/04/05/1090920442/how-russia-rescued-the-ruble
https://tradingeconomics.com/russia/currency
https://www.nytimes.com/2022/02/28/business/russia-sanctions-central-bank-ruble.html
https://www.investing.com/currencies/usd-rub
https://www.xe.com/currencyconverter/
