Russia, China reach agreement on trading in local currencies

The "Rossiyskaya Gazeta" newspaper reported on August 9 that the central banks of China and Russia have agreed to trade in local currencies.

The agreement allows Russian businesses to have almost unlimited access to the Chinese currency when trading with Chinese partners. In return, Chinese companies can pay directly in rubles. This document will indirectly increase trade turnover between the two countries.

The Russian Central Bank is currently struggling to announce the amount of the swap and when it might be activated. Everything will depend on the demand for this financial instrument.

Russian financiers note that the agreement will be another tool to ensure international financial stability, which will also allow creating liquidity in emergency situations.

Currently, in the transaction structure between Russia and China, the USD accounts for nearly 75%. This creates an additional source of budget revenue for the US economy because all transactions in USD must go through US banks.

In May, in Shanghai, Russian President Vladimir Putin called for the creation of “new instruments for managing joint Russian-Chinese foreign currency reserves.”

According to Mr. Putin, these tools will allow the ruble and the yuan not only to become more stable, but also "contribute to strengthening the stability of the international financial structure."

Illustrative photo. (Source: AFP/VNA).

China has signed several local currency agreements with Latin American and Asian countries.

Last year, direct currency trading agreements were signed with Singapore and the UK.

In 2013, the yuan surpassed the euro as the world's most traded currency.

The RMB is most actively used in transactions in China, Hong Kong (China), Australia, Singapore and Germany.

According to Dan Viet