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"This Is A Trend": Increasingly More Russian Companies Set To Drop Dollar, Switch To Chinese Yuan
As we have been reporting (and forecasting for the past several years), the Eurasian anti-US Dollar axis is rapidly taking shape, with recent events catalyzed and certainly accelerated by US foreign policy in Ukraine, which has merely succeeded in pushing Russia that much closer, and faster, to China. The latest proof of this came overnight when the FT reported that Russian companies are preparing to switch contracts to renminbi and other Asian currencies amid fears that western sanctions may freeze them out of the US dollar market, according to two top bankers.
According to Pavel Teplukhin, head of Deutsche Bank in Russia, cited by the Financial Times, "Over the last few weeks there has been a significant interest in the market from large Russian corporations to start using various products in renminbi and other Asian currencies and to set up accounts in Asian locations."
Andrei Kostin, chief executive of state bank VTB, said that expanding the use of non-dollar currencies was one of the bank’s “main tasks”. “Given the extent of our bilateral trade with China, developing the use of settlements in roubles and yuan [renminbi] is a priority on the agenda, and so we are working on it now,” he told Russia’s President Vladimir Putin during a briefing. “Since May, we have been carrying out this work.”
“There is nothing wrong with Russia trying to reduce its dependency on the dollar, actually it is an entirely reasonable thing to do,” said the Russia head of another large European bank. He added that Russia’s large exposure to the dollar subjects it to more market volatility in times of crisis. “There is no reason why you have to settle trade you do with Japan in dollars,” he said.
The chief executive of a Russian manufacturer that derives 70 per cent of its revenues from export in US dollars said his company had done the groundwork to move its contract settlements to different currencies in the event of further sanctions. “If something happens, we are ready to switch to other currencies, for example to the Chinese yuan or the Hong Kong dollar,” he said.
While the move to open accounts to trade in renminbi, Hong Kong dollars or Singapore dollars "highlights Russia’s attempt to pivot towards Asia as its relations with Europe become strained", is hardly surprising given recent events, one wonders how much of last night's sudden bout of renminbi strength may be due to Russian capital inflow. And while that particular move was certainly more driven by the PBOC and recent rehypothecated metal concerns pushing Chinese imports lower, the biggest question is how will Russian demand for the Chinese currency impact what has been a clear trend in recent months by Chinese authorities to weaken the national currency.
The punchline, again, is that what Russia is doing is merely the appetizer of what other G-20 countries, many of which already angry at the US over IMF voting power shennanigans, may end up doing in their own bilateral trade arrangements with China which suggest even further de-dollarization as the Renminbi becomes progressively more important on the global FX stage.
"It looks like this is not just a blip, this is a trend," said Mr Teplukhin of Deutsche Bank. He added that Russian companies were able to hedge the risk of further US sanctions by “changing the letter of their contracts to allow them to change currency if it is necessary”.
But perhaps most important are the next steps laid out by the Kremlin which has explained under what conditions it will "de-dollarize" more:
Some politicians have suggested Moscow should respond to western sanctions by entirely “de-dollarising” its economy. But while in recent discussions with big business about how to make the economy less vulnerable the government has advocated listing back home and settling more trade in currencies other than the dollar, it has rejected more extreme measures.
“As long as Russia is not subject to systemic sanctions, which could bring an artificial limit to our economy’s access to dollars . . . then I don’t think Russia will take any steps in order to bring about artificial de-dollarisation,” said Andrei Belousov, economic adviser to Mr Putin.
In other words, as we said all along, more western sanctions, more dropping of the USD. And now Russia has the trump card, because if it wants to show the world that the Russia-China axis does not need Uncle Sam's greenbacks, it just needs to be more "aggressive" toward Ukraine setting off new sanctions, and being "forced" to de-dollarize that extra bit more. Rinse, repeat.
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When the office is a 3-ring circus don't be surprised if only clowns can be found there.
Meanwhile, the US goes all out to preserve the petrodollar and western European dependency on (NATO/EU/IMF) + global TBTFs
(6-8-2014 AP) — "Bulgaria's prime minister has ordered on Sunday a halt to construction work on the Gazprom-led South Stream pipeline project planned to bypass Ukraine as a transit country and consolidating Russia's energy grip in Europe.
Plamen Oresharski said after meeting U.S. Sens. John McCain,..."
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And, after US-controlled IMF demands that Kiev militarily controls eastern Ukraine, US starts(?) sending lethal military aid directly to Kiev.
There was the insulting 4-week ultimatum Obama gave to Putin.
Of course, as with Iran and Iraq, Putin will never be able to prove to US a negative,
that no "support" is being given to eastern Ukrainians.
City of Chicago to up cell phone and land line tax 1.40 per month. Why? Because they need more money is all. Can you demand that of your employer? I didn't think so. A few years back tolls on the toll roads doubled. Why? Because they could. Now we hear whispers of turning the entire interstate highway system being turned into toll roads? Do you think for one moment that the PTB won't do this to create another entire government monopoly run by fat cats and the hundreds of thousands of new employees with life long pensions that would be created?
Mom used to say you can't get blood from a turnip when she had a bill she couldn't pay on time. If you work for a living you are a turnip just like me. We have been squeezed until it hurts and some day we will have had enough. The only other way to get out of this is leaving the system. You can't. If you own or are buying a home or business you pay property taxes. If you don't you will lose your property. See, we are never truly free in this country. Freedom is truly a concept that sounds nice and all but when you have no choice you are not free. I am not slamming America. I may be slamming the use of the word when few appreciate how far we have gone from the original founding of our country.
In Chicago they are writing their own gun control laws as a city now to circumvent court orders to allow for private handgun ownership and concealed carry. Proposed new laws would mandate that no gun shop or gun related businesses would be allowed to open within 500 feet of a church or a school which effectively would eliminate 99.5% of all of the city land from having a gun store of any kind. In addition a limit of one gun a month to be purchased per person? Really? What if I want to buy matching handguns for my wife and I for a gift? Nope. All gun purchases will be video taped. Etc, etc.
Is the answer to move to the Alaska bush and compete with the bears and 4 months of darkness each winter? I am not sure. America was a concept, a dream, an idea and sadly its time has passed as we the people have allowed our country to be stolen from us right under our noses. I am just as guilty and it saddens me.
Out here in small town fly-over country, while I have a philosophical gripe about being forced to pay local taxes, the actual amount I pay for services rendered is a positive bargain in comparison to even medium size cities in the general area.
The local cops are young guys with families who you know their parents and they handle the occaision drunk or domestic dispute in a low key way being ever mindful that their family's standing in the community is subject to their actions on the job.
The District Judge and Asst. DA. are avid readers and I always have interesting and pleasant conversations if we should meet in the library.
Even the two local bankers are in the George Bailey model rather than Mr. Potter. Poor credit risks are treated with high costs but extenuating circumstances get a hearing.
All in all, it's a different world that we live in out here and while I was reluctant at first to make the change years ago, current events make me realize it was a very smart move.
We now live in a small city on the outskirts of a larger one, but still relatively small. We love it. Wife didn't want to move and now she is wanting to stay because where we live is great for our kids and life is just better. We had a carnival this past weekend. You can hear the gents down at the local firing range practicing marsmanship. Everyone has a garden and kids ride their bikes freely. Shitcago and CONnecticut can fucking suck me.
One thing I learned is that you have to keep your eye on the City Council.
We recently had an attempted coup by the more Progressive elements who seemed to think that some hefty debt was in order to "do" something that was 'neccessary' so they tried to remove the mayor, by dubious legal reasons, who was opposed.
I'm afraid I made some of them angry by questioning their 'legal' pretense and comparing their methods to a Banana Republic. The City Atty. agreed with my argument but wisely (for him) abstained from my characterization.
We are debt free but I'm afraid I was cast in a rather unflattering light for my objection in the local paper which is owned by a principle 'spendinista'.
No matter. A few attaboys from some citizens of probity and I was redeemed.
We still make some of our entertainment out here the old fashioned way.
At least you were not arrested like that father in Massachusetts for questioning a book his daughter was forced to read.
This is what I found
http://eagnews.org/new-hampshire-father-opposes-required-reading-of-porn...
Get a load at what the Progressives want your kids to read AS AN ASSIGNMENT!!
Time for some blood pressure medication.
It's certainly disgraceful. Now I have nothing against the book existing nor against it being read by anyone who is able to read. Anyone.
But if a parent decides their child shouldn't be assigned (forced) this book as an "assignment" that parent's wishes should be respected. This book has nothing, not a word, to be taught that isn't able to be learned from another book without that sexual content.
Oh, but perhaps school officials would like to suggest teens & pre-teens aren't sexually charged enough, because hormones don't matter.
Your name indicates that you took your bike with you.
Indeed I did.
It's not so bad being an antique if you're riding one, flying down a long country road.
Not my rig but same year with a few minor different cosmetic touches
http://www.yankeechapter.org/images/classads/78%20flh%20and%20hack.jpg
As I advance further into geezerdom, I'll probably hook up the sidecar, but to be honest, it feels like trying to run with your arm extended holding a ten lb. bag of potatoes.
Squirrelly as hell without weight and that third brake.
Same thing was happening in Connecticut so I FUCKING MOVED.
Deerhunter - We are all guilty in this one but it is not over, the communists close ranks and reveal themselves as they do so. Even the likes of Chomsky are appalled at the lefts real intentions. (funny how history has shown the academic left is always surprised when they are killed by their own makings) This next election brings us the opportunity to skin these communists in the voting booth. Never give up.
Yeah bay-bee.
come on guys why all the negatives here.
we can still win this.
every day we are changing in london,tel aviv andf washing ton.
come ons fuckers beliefs in your cuntries
eye sore netanyahoolio yesterday he had a big cheshire cat grin on his face like he had a cunning plan..
look at it this way death will not come to us all yet as the jewish leaders will need goy zombies for the fema camps
come on suckers believe in the power of yes we can
It will work for a while, then one of their currencies will crash and the other country's citizens wiloose lots of money. Then they will be back to using dollars. the ruble crashed only 18 years ago.....
just a thought.....
Is it me or is Putin starting to look like The Joker?
A smart trend!
Obama does not care what happens to the dollar. His brain is locked in cruise control, and all he wants to do is play golf, wrack up huge debts jetting around the world, and try and make it until Jan. 2017 (without being impeached before then) where he will hope to pass the gigantic pile of fiscal shit onto the next bunch of lunatics, and wait in line for his library and aircraft carrier. Unfortunatly for all of us, the finish line is just too far away, and the Great Reset is going to happen on his watch.
Washington has it under control. A few more sanctions will put an end to this foolishness.
Russia is clearly not understand meaning is be 'cost'!
Thus will be show them!!
Imagine, they came to Benghazi to kill Q-daffy and started a trend of dollar debasement.
Causality of unforseen consequences.
All the while Obammy sang "From Yorktown to Libya' at Cannes summit to incense his pardner in crime of Tripoli.
Mission(ary) accomplished! Everyone thinks THEY are on top!
Chinese people love progress at the expense of clean air and water....just like us!
Given the recent Ukraine events, and the threats being made by the USA and the entire EU community, Russia has decided that they can only survive by exiting the EU system as much as possible. They also have decided that the USA aims at nothing short than destruction of Russia and that peace is now impossible. Putin has been a long time coming to these conclusions. But these last few weeks have made clear that the USA has decided to cast Russia as an enemy state and to attack it at every opportunity.
This leaves Russia trying to reorganize it's world outlook and economy towards the east and toward BRICS. They have no choice, the choice has been made for them. Either surrender all your interests to Washington, or you will be forced to surrender. That is what Ukraine is, a clear message that the war is on and there is no going back.
So, with no choice, we will see Russia seek to exist outside the dollar system as far as possible. This can all be reversed easily, that would require a change in Washington. A peace program with Russia and Washington forcing Ukraine's armed groups to peace talks, and to make them see reason, both sides. Then NATO and Russia would have to agree on common interests and stop the attempts to undermine each other. This will never happen, but it could, it would be easy. But this is not in the Neo-con agenda, remember, we as Americans are being held hostage by these Neo-con war mongering fools. AIPAC is part of this, so are the banks and the military industrial/spy complex. They all gain riches by conflict with Russia, we people suffer and have no voice. When AIPAC speaks, the congress gives standing ovations over and over again, when us citizen tax payers speak, they ignore us, spy on us, threaten us and surround us with militarized police squads. Notice the difference?!?
Jack
Yes the USA has become the USSA but Putin ain't no saint.
As Putin clicks his ruby slippers together wishing for the end of the fiat US dollar this will end poorly for his beloved country. For all the USSA's sins the world still holds it's nose and makes use of the USSA dollar. It is still the safest economic and military haven on the planet. I know this says little for this blue ball floating in space but it is fact.
China does not want the RMB inflation which comes with a strong RMB dollar which degrades their export abilities and hurts their economy.
Dude, you've been forex trading for too long. Not all of the world's problems can be evaluated and solved by looking at currencies. If the US really is out to destroy Russia, do you think the Russians are going to be fretting about exchange rates?
Dude - the USA is not out to destroy Russia, it is out to become the USSA - the communists are in the walls.
The Russians do it but the Germans do offer it for everybody and make lot of money with it:
https://www.corporate-clients.commerzbank.com/files/brochures/_en/renmin...