Page 20 - bne_newspaper_August_17_2018

Eastern Europe
August 17, 2018 www.intellinews.com I Page 20
Russia and Turkey step up fight against dollar’s dominance in trade
Ben Aris in Berlin
Russia’s diamond monopolist Alrosa has started selling its diamonds to foreign customers, settling the deals in rubles, not dollars. The move, reported by Reuters on August 15, is the latest development in Russia’s long-term campaign
to end the dollar’s world dominance as the settlement currency for international trade— a goal shared with Russia’s friends China, Turkey and Iran.
Moscow’s fight against the dollar was this week boosted in Ankara where—during a visit from Russian Foreign Minister Sergei Lavrov amid
a financial crisis that Turkey claims is the result of an “economic war” being waged by the US and other foreign powers—Turkish Finance and Treasury Minister Berat Albayrak promised measures to reduce companies’ forex risk
and said that the dollar, now being deployed as a “political punishment tool”, had
lost trustworthiness.
Diamond deals are usually transacted in
dollars, but with tensions between Moscow and Washington again on the rise, Russia is moving towards an attempt at abandoning the universal greenback as the currency of international trade.
Russia has already made an attempt at selling crude oil in rubles, using the St Petersburg commodity exchange, but the idea has not caught on with international customers. However, the Kremlin is hoping to have more luck with the smaller and more specialised international diamond trade. In June, Alrosa sold more than
“The dollar’s days as a global trade currency are numbered,” Russian Foreign Minister Sergei Lavrov has warned.
10.8ct of diamonds at an auction in Hong Kong for rubles, BCS Global Markets reported.
The payment went through a branch of Russian state bank VTB in Shanghai. In addition, a long- term buyer of Alrosa diamonds from India paid for a scheduled supply in rubles. “This purely technical and experimental operation should not materially affect the company’s bottom line,” BCS GM said in a note.
Even if the volumes and market are limited, Russia is unlikely give up on the idea of scrapping the dollar in trade as the clash with Washington has increased the urgency of loosening the US hold on international commerce for the Kremlin.
T-bonds dumped
In a precursor to the move away from dollars, the Central Bank of Russia (CBR) dumped a large part of its US Treasury bill holdings in July, briefly causing the price of US bonds to rise as Russia took itself out of the top 30 largest holders of US sovereign debt almost overnight. Russia had cut the share of US Treasury bonds (T-bonds) in its FX/gold reserves to $14.9bn in May 2018, down from $48.7bn in April, and $96bn in March, Reu- ters reported citing US Treasury data on July 18.
Russian foreign minister Sergei Lavrov said on August 15 that “the dollar’s days as a global trade currency are numbered”. He was speaking at a news conference with his Turkish counterpart. Turkey, echoing Lavrov’s comments, has agreed with Russia to settle bilateral trade with their