China-Russia dollar transfer may signal conclusion to manipulation of yuan

China and Russia announced Wed they’ll no longer Trade with each other utilizing the United States of America dollar. The announcement came as top officials from China and Russia met in St. Petersburg to forge bilateral cooperation in Trade and energy. U.S. currency isn’t expected to be affected and the transfer could expose the yuan to global sector forces that determine the value of other currencies.

Dollar to become extinct among bilateral transactions with Russia and China

There is no more connection with China, Russia, and the American dollar anymore. The relationship between China and Russia has long been one of discontent. Because of this the two countries have used a third party currency to negotiate trade. They chose to use the American dollar as their form of trade and had their trade valued at $ 38.8 billion last year alone. Russia-China trade is expected to reach $ 60 billion in 2010. The two countries have decided to use rubles or yuan when trading with each other from here on out.

Behind the China-Russia dollar move

The Chinese stock exchange already recognizes the Russian ruble. Moscow will see the Chinese yuan on their stock market as early as December. International Business Times reports that this change has nothing to do with America. Rather, it is a precautionary measure aimed at mutual protection of the two countries’ economies in the aftermath of the global financial crisis. A China-Russia oil deal may be the main reason for the switch from the dollar. Soon a Siberian pipeline will pump over 1 billion barrels from Russia to China every year. Russia wants its commodities exchange to trade for oil in rubles.

International exchange always has some issues with it

The China-Russia dollar move isn’t expected to change the dollar’s role in international trade. The trade among China and Russia has been expected to change for quite a while, this is not an unexpected change of events. The United States has wanted the Chinese yuan to be viewed differently in international trade for a while now, and this is the first step in stopping China from manipulating its value.

Articles cited

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