To stop the collapse of his country’s currency, Putin took a new initiative that the rest of the world has been reluctant to do. That is non-dollar trading!
It has been 7 months since Russia invaded Ukraine. Even today both sides are fighting fiercely. Russia has changed its war tactics accordingly by deciding to stop a single attack in all areas and go for a full-scale attack on a particular region or city. Earlier, Western countries including the United States, Britain, Germany and the European Union imposed various economic sanctions on Russia against this military action by Russia. Sanctions continued in an attempt to isolate Russia globally economically. Those barriers continue today.
Russia’s ruble fell due to war!
Last March, Russia’s major banks were removed from the “SWIFT Banking” process that isolates Russia from the International Monetary Fund. As a result, Russia’s official currency, the ruble, suffered an unprecedented fall. The Russian ruble fell from 80 to 119 against the US dollar. It fell almost 29% in a single week. And it was only when word spread that Putin had ordered nuclear weapons to be ready that the Russian ruble suffered such a sharp decline. To stop the collapse of his country’s currency, Putin took a new initiative that the rest of the world has been reluctant to do. That is non-dollar trading!
A new plan to recover the ruble!
Putin held a high-level consultation on measures to restore the value of his currency, the ruble. At the conclusion of the consultation, small Russian banks, which were not banned from SWIFT banking practice, were advised to be more active than before. Countries wishing to trade with Russia were instructed to do the necessary by those banks. But Russia also knew that these measures would only serve to prevent the situation from worsening.
Now ruble trading! No dollar!
Russia issued an action announcement to stop the fall of the ruble in the international market. He also issued the announcement targeting the countries responsible for this situation by imposing economic sanctions on them. Russia will generously continue to trade gas to “unfriendly countries” that have embargoed them. But not in US dollars! In Russian rubles! Putin threw a bomb. Putin announced that the new trade regulations would be released within a week.
Why ruble trade only in gas?
This announcement by Russia will not only rescue their currency from collapse! It is to teach the right lesson to the European Union, which has imposed a ban on them and engaged in many trades with them. Russia was the largest supplier of gas to the European Union, despite its extensive trade. More than 40% of the total gas demand was dependent on Russia alone. Britain and the European Union refused to agree when the United States insisted on banning Russian oil and gas exports. Because if those countries leave Russia, they will have problems with gas and the very foundation of their economy will shake. That’s why Russia stepped on the gas.
Did Putin’s announcement work?
He also knows very well that it will take time for Putin’s announcement to take effect. Because many gas contracts are already signed. They should be modified and adopted by other countries. But whether Putin has thought about all this… his announcement has been fruitful. The value of the Russian ruble suddenly started to rise and reached 95 rupees. 119, up over 30 percent from Rs. Global economists have turned their attention to Russia, saying that if the ruble rises by just another 15 rupees, the ruble will reach pre-war levels in Ukraine.
Countries including India took advantage of this situation of Russia and increased the amount of crude oil they buy from Russia. No matter how you look at it, Russia also has a huge profit in this business, so that country also got into this new business with taxes. Do you know what the result is? Today, the ruble remains at 60 to the dollar. Putin has brought the value of his country’s currency to a much better level than it was before the war in Ukraine. Putin has moved to deal with the economic sanctions of Western countries with the left hand.
Dollar Trading Vs Ruble Trading
On the surface, it looks like Russia is clashing with the Western countries (with the European Union), but it is secretly holding hands in the US dollar trade! Markets around the world are based on the US dollar. A country will first convert its currency into US dollars for any goods it buys. Then others will trade in dollars. Complaints often arise that the US is profiting from this middleman “dollar” that travels without difficulty, and it goes away. If any country leaves the dollar business in that country the US will do everything in its power to root out that idea.
But many countries have indirectly and directly started violating the dollar trade in small matters. India has received petrol from Iran and Iraq several times in non-dollar trade. Russia and many other countries were doing business with the European Union’s euro. Crude oil, the most important commodity in international trade, is often left out of the dollar trade and often mired in controversy. Now India and Russia are planning to embark on a separate trade strategy based on their long-standing friendship. This means that the trade between Russia and India is going to be done in Rupee-Ruble trade. Both countries have decided that there is no more room for the intermediary dollar.
What is the benefit of non-dollar trading?
It may be doubtful who will benefit from doing business without the dollar like this. No need for confusion. The share of the United States, which will profit without spending a cent through the currency without pinching anything in the trade of the two countries, will be “cut”. The share of the cut is divided between the two trading countries according to their power. How the cut share is going to be shared is an issue between the countries. But this “cut” profit is a big problem for America.
So profitable in non-dollar business?
Some may think that why should they antagonize the superpowers because there will be some mushy profit. But China is approaching the status of an economic superpower by doing more business only with its own currency. This is what is behind Russia standing majestically despite war and economic embargo for 8 consecutive months. Russia ensures that its currency accounts for more than 30% of its trade. Russia is now in full swing to fully trade with its own currency. Many countries are coming up with a new currency for international trade that everyone will use.
Developing countries trading with their own currencies can help their economies grow at lightning speed. Fully aware of this, India has always pursued its non-aligned policy and engaged in trade with war-torn countries whenever it got the chance. It is a win-win approach as those countries also benefit from it. This is why India has decided to accept the Rupee-Ruble trade proposed by Russia.
A. Sakthivel, Chairman of Indian Export Organizations (FIEO), an organization set up by the Ministry of Commerce of India, said, “State Bank of India has agreed to facilitate the mechanism for rupee-ruble trade. Some banks are also showing interest. India’s exports to Russia were around $3.3 billion in the last financial year. When this new business takes effect, we expect that export to increase to 5 billion dollars,” he said.
When will the dollar war end???
We should not forget that Saddam Hussein, Gaddafi and others took the decision to leave the world dollar business many years ago. After that, their economy skyrocketed, and then they were wiped out by superpowers in a few days, a blot on history. America, which was able to suppress those countries because they were small countries, could not dare to openly oppose Russia, which was its counterpart. Many countries have joined hands with Russia and have started showing interest in doing business with their national currency. What will happen to the USD now? What will America do? Will this new initiative of world nations succeed? The answer lies in the hands of time. Let’s wait and see what happens.