Whether or not that has been successful, however, is still up for debate.
According to Russian Deputy Minister of Economic Development Dmitry Volvach, the Shanghai Cooperation Organization (SCO) has increased its share of using national currencies to trade between SCO member states from 40% in 2022 to 92% in 2024.
Market reaction to move
The market for the U.S. dollar didn’t seem to flinch at the change in usage.
From 2022 to present day, the dollar has significantly risen against the Chinese yuan as China experiences increased economic struggles that have resulted in the release of far-ranging stimulus packages in the past month.
Since the beginning of stimulus actions from the Chinese government on Sept. 24, the yuan has fallen more than 1% against the dollar. China is undergoing a prolonged period of deflation, which spurred the government’s move to introduce more currency into the economy. Still, the repercussions on the yuan will likely be noticeable in years to come.
How has Russia done?
Russia’s invasion of Ukraine in February 2022 changed the geopolitical and economic landscape in many ways — driving energy prices temporarily through the roof and spurring increased tensions across the globe.
Things haven’t exactly gone well for the Russian ruble since then. After massive fluctuations in the foreign exchange market following the invasion, the U.S. dollar has steadily gained ground against the Ruble in huge fashion.
Compared to the U.S. dollar, the ruble has lost almost half of its value since the invasion two years ago.
Central bank buying
Since 2022, central banks have been gobbling up gold at levels not seen for decades. Some economic analysts have attributed this move to a concerted attempt at firing a shot across the bow of America’s currency. Others have suggested the move is a lead-up to releasing a new currency from BRICS nations, rumored to be named the “unit,” which would be backed 40% by gold and 60% by member country currencies.
Going after the dollar?
Both theories are likely to have some merit, but the move from Russia, China and their BRICS allies are likely much more defensive than offensive. While the talk about a new currency and posturing against the U.S. dollar will help presidents Vladimir Putin and Xi Jinping save face amid serious economic struggles — one look at the foreign exchange markets shows they’re likely more focused on their own problems at home than taking down a currency that has served as the world’s leader since the end of World War II.
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