The number of countries switching to national currencies to settle bilateral trade deals is growing in the face of the US weaponization of the dollar.
When US President Donald Trump re-imposed sanctions on Iran last week, he warned that any company doing deals with the Iranians in dollars would also be subject to sanctions.
Several Russian companies are also under US sanctions, while Trump’s tweet last week doubling tariffs on imports of Turkish steel has caused Turkey’s currency to crash more than 20 percent against the US dollar.
On Tuesday, Russian Foreign Minister Sergei Lavrov and his Turkish counterpart Mevlut Cavusoglu said they backed using national currencies, not the US dollar, in bilateral trade.
Lavrov told a joint news conference with Cavusoglu in Ankara that identical processes have been happening in trade with Iran.
“Not only with Turkey and Iran, we’re also arranging and already implementing payments in national currencies with the People’s Republic of China,” he said.
Iran and Turkey signed an agreement last year to use local currencies in trade while Tehran and Moscow discuss a similar arrangement.
Iran and Turkey are already using national currencies following an agreement last October, with a similar arrangement also in place between Iran and India.
Lavrov echoed statements by Russian President Vladimir Putin, saying he was confident “the grave abuse of the role of the US dollar as a global reserve currency will result over time in the weakening and demise of its role.”
There have already been settlements in national currencies between Russia and the BRICS – the bloc that also includes Brazil, India, China and South Africa.
Elsewhere across the world, Nigeria has introduced China’s yuan as an alternative trading currency to the US dollar.
First auction of yuan in Nigeria
Last month, Nigeria’s central bank sold yuan at its first auction of the Chinese currency, two months after it agreed a $2.5 billion swap with Beijing.
Nigeria is Africa’s biggest nation by population and its largest economy due to its oil exports. The OPEC member imports heavily from China which is Nigeria’s biggest trading partner after the US.
Trade volumes between China and Nigeria totaled $9.2 billion in 2017, with the African country running a big deficit through its $7.6 billion imports.
China has also signed a three-year swap worth $4.8 billion with South Africa and similar deals with other emerging markets, some of which have been selling renminbi in businesses.
Moreover, an unfolding trade war between the US and China is taking its toll on their bilateral trade while American sanctions on Iran are raising interest in oil trade in yuan.
The launch of yuan-denominated Shanghai futures in March has created a lot of enthusiasm among international companies seeking to tap China’s bustling commodity markets.
China has threatened to retaliate by slapping duties on several American commodities, including oil which has been flowing in greater volumes to the world’s biggest consumer of crude in recent years.
According to energy experts, a cut in Chinese purchases of US oil may boost Iran’s sales, which Washington is trying to curb with new sanctions due to “snap back” on November 4.
China’s launch of yuan-denominated Shanghai futures in March has created a lot of enthusiasm among international companies seeking to tap the Asian nation’s bustling commodity markets.
Experts say the new futures contract traded on the Shanghai International Energy Exchange is now on course to become an alternative international oil benchmark not priced in dollars.