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Russia, China to trade in national currencies

MOSCOW: Russia and China agreed to switch part of bilateral trade to their national currencies as the oil deals between the two countries amounted to $100 billion dollars.

“It is essential… to carry forward the work of creating favourable conditions for widening the sphere of payments in roubles and yuan,” said Russian President Dmitry Medvedev and Chinese President Hu Jintao in a joint statement.

Greater use of the national currencies by Russia and China could affect the value of the dollar considering that their trade stood at $56 billion last year. China has emerged as Russia’s biggest trade partner, overtaking Germany and the Netherlands even as bilateral trade declined by 50 per cent in January-April. To offset the decline the two countries agreed by undertaking big investment projects in machine building, power generation, construction, consumer industries, agriculture, transport, communications, high-tech and mining.

The decision to switch away from the dollar came a day after the BRIC summit in Yekaterinburg called for the establishment of “more diversified international monetary system.” The Chinese leader arrived in Moscow from Yekaterinburg on a state visit that marks the 60th anniversary of diplomatic relations between the two countries.

Mr. Medvedev said the two countries had signed oil deals worth a total of around $100 billion, including $25 billion in loans Beijing gave to Moscow to finance construction of an oil pipeline from Russia to China and the supply of oil under a 20-year contract.

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