China-Russia dollar transfer might indicate end to manipulation of yuan

Trade between Russia and China will no longer involve the U.S. dollar, a development made public by the two countries Wednesday. Word came from St. Petersburg about the decision as the 2 countries met there for a conference on Trade and energy cooperation. The China-Russia dollar decision is not seen as detrimental to United States currency exchange and could force the value of the yuan in line with other global currencies.

China and Russia opt-out of using the U.S. dollar for bilateral transactions

The connection with the U.S. dollar, China and Russia has officially ended. China and Russia are former enemies that required importers from each country to use a third-party currency for bilateral transactions. The dollar was the third-party currency of choice, and last year Russia-China trade was valued at $ 38.8 billion. Russia-China trade is expected to reach $ 60 billion in 2010. As of Nov. 24, either rubles or yuan must be used for all Russia-China trade.

Motivating factors behind this dollar change

The Russian ruble is a part of the Chinese stock exchange already. The Chinese yuan is expected to start trading in Moscow in December. International Business Times reports that this change has nothing to do with America. This is merely a precaution taken by the two countries in the wake of the global financial crisis. The largest contributing factor is really probably nothing more than a Russia-China oil contract. A new Siberian oil pipeline will soon pump 1 billion barrels of Russian oil into China every year. Russia is requesting the oil be exchanged through rubles.

What issues arise from international money?

The China-Russia dollar move isn’t expected to change the dollar’s role in international trade. According to Joe Weisenthal at Business Insider, China and Russia switching to yuan and rubles for bilateral trade is something the world has been waiting for. The U.S. in particular wants the yuan to become a real trade currency, valued on the same level in relation to other currencies, instead of being manipulated by the Chinese government.

Information from

International Business Times

ibtimes.com/articles/85216/20101124/china-russia-dollar-vladimir-putin-wen-jiabao-ruble-yuan-bilateral-trade.htm

Business Insider

businessinsider.com/china-and-russia-drop-dollar-for-bilateral-trade-2010-11

NASDAQ

community.nasdaq.com/News/2010-11/china-russia-open-up-nondollar-trading.aspx?storyid=46466