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As the Dollar Fades, Russia and Other BRICs Benefit


This post first appeared on Russia Insider

US and European Union sanctions against Russia have encouraged Moscow to hasten a move away from the dollar as soon as possible.

During his last trip to Crimea in August, President Vladimir Putin said that Russia should aim to sell its oil and gas for roubles globally, arguing that the dollar monopoly in energy trade was damaging Russia's economy.

As part of the Brics alliance, which includes China, India, Brazil and South Africa, Russia has been spearheading the group’s progression towards independence from Western institutions and the dollar.

A decision to create a Brics bank in July resulted in two key entities – a New Development Bank (NDB) and a Contingent Reserve Arrangement (CRA) – designed to form a developing world alternative to the two institutional bulwarks of the “dollar zone”, the World Bank and International Monetary Fund (IMF). It is likely that the Brics Bank will use the renminbi as its main currency.

An article in The Financial Times recently quoted Jan Dehn, head of research at Ashmore, an emerging markets investment manager, as saying: “I’ll eat my hat if the renminbi isn’t the strongest currency on the planet over the next 10 years.”

Indeed, as the renminbi strengthens, Brics will be the one to gain - and Russia will most certainly be one of the big winners of dropping the dollar and adopting the rouble or the renminbi as its trade currency.

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