De-Dollarization: Russia Has Found Yet Another Alternative to the Greenback

Thursday, November 29, 2018
By Paul Martin

Russia has found yet another potential substitute for the dollar in international trade. While Washington is threatening to step up sanctions, freeze Russia’s dollar-denominated assets, and even target the country’s sovereign debt, Moscow is confidently moving away from the greenback.

The US is ‘shooting itself not in the foot, but a bit higher’, said Russian President Vladimir Putin commenting on Washington’s sanctions and attempts to use the dollar as nothing short of a weapon.

‘We do not have the goal to move away from the dollar, we are forced to do this. Let me assure you, we will do this… We just do not want to do anything sudden that would hurt us… We are not leaving the dollar, the dollar is leaving us’, the Russian president said, while speaking at the annual ‘Russia Calling!’ Investment Forum on 28 November.

Meanwhile, Russia’s de-dollarisation programme is under way amid Washington’s threats to impose sanctions on the country’s sovereign debt. On 27 November, the Russian Finance Ministry reported that it had issued 1 billion euros ($1.13 billion) worth of seven-year bonds with a yield of 3.0 per cent on Tuesday.
According to VTB First Deputy Chairman Yuri Soloviev, the share of foreign participants in the latest issue of Russian Eurobonds had exceeded 75 per cent.

Commenting on the move, Deputy Finance Minister Vladimir Kolychev told Sputnik that Russia’s placement of sovereign Eurobonds in euros was not directly related to the Kremlin’s de-dollarisation plan, but admitted that ‘we cannot say that it will not encourage’ this process.

However, Bloomberg’s opinion columnist Leonid Bershidsky believes that the endeavour is part of a comprehensive programme: ‘[T]he bond placement is a test of the “de-dollarisation” program, put in place by President Vladimir Putin this year’, he wrote, recalling that Russia sold bonds denominated in euros for the first time since 2013.

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