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In view of the scale of the financial sanctions imposed on Russia, certain States are seeking to free themselves from the dollar to avoid being in turn the target of American reprisals. Is the supremacy of the greenback questioned?
Yesterday, the G7 made it known that it would categorically refuse to settle Russian oil in rubles as the Kremlin is now demanding. This refusal to accept is in itself a striking proof of the extraordinary power that the dollar retains. It is the currency of the oil markets and of an overwhelming majority of commodities or financial products. It will take much more than an ukase from Vladimir Putin to overturn the table. Other States are worried about the extent to which the American currency has become a weapon of war likely to destroy their economy, so they are trying to find an alternative, with very little concrete result yet.
India, for example, is studying an oil rupee swap mechanism to import Russian oil
This track mentioned by the Indian Minister of Foreign Affairs was denied yesterday by the Minister of Energy questioned in Parliament on this question. The idea has been emulated by competitors: the Iranian Minister of Petroleum has offered New Delhi deliveries in rupees or in Iranian currency. China already pays for part of its Russian imports in renminbi or rubles, it could do more. Even more surprising: Saudi Arabia, the great ally of the United States in the Gulf region, has hinted that it could now quote its black gold in renminbi. The Saudis and Chinese have been discussing this for six years, their talks have suddenly intensified since the implementation of anti-Russian sanctions. From a business perspective it makes sense. China buys three times more oil from Saudi Arabia than the United States. Beijing absorbs 20% of the kingdom’s exports. But Riyadh also has a privileged relationship with the United States and its currency to preserve: the riyal is backed by the dollar and a quarter of the Central Bank’s reserves are made up of Treasury bonds, that is to say American debt. . Prince Mohammed Bin Salman must therefore weigh the pros and cons before going further in his monetary rapprochement with China.
Is the renminbi able to quickly supplant the dollar?
This is the will displayed in Beijing. To achieve this, China has behind it the weight of its economy and its trade with the rest of the world. But until the renminbi is freely convertible, it cannot assume a role equivalent to that of the greenback. And to inspire confidence, it is better for the central bank to be fully independent, which is not yet the case in China. The renminbi is therefore far from being a credible and immediate alternative to the dollar. China, however, has a growing monetary grip. With in particular the projects that it finances within the framework of the Silk Road. Fifteen African countries now have yuan in their reserves.
So there is a beginning of “dedollarization” of the world economy?
According to a recent study by the IMF, the erosion of the dollar began 20 years ago. The share of the dollar in foreign exchange reserves has increased from 70 to 60%. And this has benefited the Chinese currency relatively little, it only constitutes a quarter of alternative currencies. The rest is made up of a basket of currencies considered safe, the Canadian dollar, the Swedish krona or the South Korean won are increasingly popular. Do without the dollar, yes, but not at any price.
►In short
In Brazil, President Bolsonaro has just fired the boss of Petrobras because of fuel increases
In the space of a year, this is the second time that he has fired the leader of the oil company for the same reason. He accuses the company in which the state is the majority shareholder of fueling inflation.