The conflict between Russia and Ukraine has been going on for more than four months, and the West has imposed unprecedentedly severe sanctions on Russia. This has caused some countries that rely on Russian energy to face various obstacles and restrictions when conducting trade contacts with Russia. However, recently, more and more transactions involving Russia have begun to be settled in RMB, which not only has not hindered Putin from making money, but has also further promoted the internationalization of RMB and weakened the dominant position of the US dollar in the world.
After the conflict between Russia and Ukraine, the Western world has been arguing over whether to embargo Russian energy. Several Western countries that are not deeply dependent on Russian energy insist that purchasing Russian energy now is to provide Russia with "war funds" to force other countries to stop transactions with Russia, and even want to use sanctions to coerce other countries.
However, as the world's second largest oil exporter after Saudi Arabia and the world's largest natural gas exporter, its energy has a very important impact on Europe and the world. Under such circumstances, Russian President Vladimir Putin directly issued the "Ruble Settlement Order", requiring "unfriendly countries and regions" such as Europe and the United States to open ruble accounts in Russian banks. When buying natural gas, settlement is done in rubles.
Putin’s move is considered by the outside world to be “the toughest response to Western sanctions.” After that, countries such as Poland, Bulgaria, and Finland were cut off from natural gas supplies by Russia. The effectiveness of Russia's heavy blow is so significant that some countries have to start thinking about how to smoothly purchase Russian natural gas without violating the EU sanctions on the ruble.
After the conflict between Russia and Ukraine broke out, some Russian energy sources, including oil and coal, were sold at discounted prices, which made some countries very tempted. India, a good ally of the West, took the opportunity to purchase a large amount of discounted Russian energy, which also aroused dissatisfaction in the West. Biden even publicly criticized: "Among all allies, India is the least reliable." But even in spite of offending the United States and Europe, India is reluctant to take such a huge advantage and is still trying to find ways to purchase as much Russian energy as possible.
Recently it was reported that UltraTech Cement, India’s largest cement manufacturer, imported 157,000 tons of Russian coal and paid in RMB. This incident immediately attracted widespread attention. Indian government officials said that in India-Russia commodity trade, it is very rare to use RMB for settlement, but due to Western sanctions against Russia, this situation will become more and more frequent in the future.
Sources revealed that in addition to Chaoke Cement Company, other companies also paid for Russian coal orders in RMB. A senior foreign exchange trader commented on this: "RMB settlement is of great significance. In recent decades, it has almost never been heard of Indian entities using RMB for payment in any international trade . It can be seen that now These companies are avoiding the US dollar. "
British media Reuters , which has always been very concerned about China, also analyzed sourly in the report that more and more transactions with Russia are settled in RMB, which is very important for China. It's a win-win situation for Russia. Not only does it protect Russia from the impact of Western sanctions and prevent Putin from making money, it also further promotes the internationalization of the RMB and weakens the dominance of the US dollar in global trade.
data shows that before the Russia-Ukraine conflict, the proportion of RMB payments in the world had risen to a record high. Now the impact of US sanctions on Russia may further increase this proportion. As the director of the American Institute of Economic Research said, Russia's series of sanctions against the United States have shot itself in the foot.
But even if the United States comes to its senses and realizes that this will help promote the internationalization of the RMB, it will be difficult to change anything. Because the United States is unwilling to stop sanctions on Russia and it is difficult to prevent other countries from purchasing Russian energy, more and more companies and countries that find it difficult to pay in U.S. dollars will consider switching to RMB for payment.Unless the United States stops clinging to Russia, it will have to watch the RMB weaken the dollar's dominance in global trade during the Russia-Ukraine conflict.
