Russia and China are poised to take a small but symbolic step in their expanding economic relationship, a move that in the long term could make the dollar less relevant to business between the two nations.
Moscow securities exchange is scheduled to open direct trading between the Chinese currency, the renminbi, and the Russian ruble. If the market develops, it could eventually cut the dollar out of a portion of Russian and Chinese trade.
Although China’s business with Russia is only a sliver of what it does with the United States, there is room to grow: Russia is the world’s largest energy exporting nation, and China a big consumer as the world’s second-largest economy, behind the United States. And yet when a railroad tanker of Russian oil crosses the border into China, the transaction is settled in dollars.
The new currency exchange is meant to start changing that. The trading system will operate through the Moscow Interbank Currency Exchange, or Micex, which is Russia’s largest stock exchange and also handles foreign currency transactions. It will be the first trading in the Chinese currency outside mainland China and Hong Kong.
In the long term, if other nations moved in the same direction, trading in renminbi outside China could diminish demand for the dollar. Chinese companies exporting to Russia or other countries could instead buy local currency directly, without the need for dollars as a common currency to conduct their business.