BRICS: The dollar loses ground in Russia in favor of the Chinese yuan

The monetary influence of the BRICS is growing day by day. In recent news, the Chinese currency, the yuan, has surpassed the dollar as the most used currency in Russia. A change that is in line with the desire of the alliance countries to limit their dependence on the American currency.

BRICS Exodus from the Dollar Underway

According to recent reports, the Chinese yuan has officially overtaken the greenback as the primary currency in Russian trade. Figures show that the yuan accounts for more than 42% of currency transactions in Russia, compared to 39.5% for the US dollar.

These data demonstrate the growing importance of the Chinese currency in international transactions. Indeed, yuan trading volumes have tripled in 2023, reaching $385 billion.

This reflects sustained confidence in the stability and usefulness of the Chinese currency. A development that is also interesting for the BRICS, of which Russia and China are influential members.

This evolution represents a significant change in the dominance of currencies. It reflects a wider trend of BRICS towards de-dollarization, through the alliance’s commitment to promoting and adopting local currencies.

BRICS: Chinese Yuan Officially Overtakes US Dollarhttps://t.co/798dlLc0dN

— John Morgan (@johnmorganFL) April 11, 2024

A Response to Geopolitical Realities

The shift away from the US dollar in favor of local currencies is not just a strategic maneuver. It is primarily a response to geopolitical dynamics, especially those concerning Russia, which faces sanctions imposed by the West.

At heart, this situation has fostered greater cooperation among BRICS members. Sharing concerns about the use of the dollar as an economic weapon, these countries seek to mitigate their economic vulnerabilities.

Beyond these geopolitical considerations, the strengthening of economic ties between Russia and China has played a role in this evolution. Bilateral trade between the two nations reached $240 billion in 2023, an annual increase of more than 26%.

This upward trajectory is indicative of a broader trend towards increased economic interdependence within the BRICS. A policy that further reduces the alliance’s dependence on external currencies like the dollar.