Russia plans to issue its first yuan-denominated bond as the country is working with China to cut reliance on the US greenback, Russian broadcaster RT reports.
China and Russia are drawing increasingly close amid a changing global landscape marked by President Donald Trump’s “America First” policy and his trade war which involves multiple battles with US allies and others alike.
Beijing and Moscow have been planning yuan bonds since 2016, but the plan has been postponed several times. According to RT, Russia now expects to issues its first sovereign debt in the Chinese currency, officially called renminbi, by the end of the year or early next year.
Both countries are concerned about “the dollar hegemony” and see the launch as a stepping stone in their bid to break the dominion up, the network said.
“It’s a step towards de-dollarization,” investment strategist with Premier BCS Anton Bakhtin told RT. “Secondly, it’s an additional bridge between us and the Chinese investors.”
As tensions escalate with the US, world countries are becoming increasingly worried about Washington using global reliance on the dollar as a weapon.
However, it will take much more time to fully shift away from the greenback and countries are looking for additional financial instruments as protection.
Both China and Russia have been stockpiling gold. Since December, the People’s Bank of China has reportedly added about 100 tonnes of gold to its reserves. Russia has bought 106 tonnes of the precious metal this year.
Over the past decade, Russia has more than quadrupled its gold reserves to more than 2,200 tonnes and now owns the fifth-largest stockpile by country. China’s reserves reportedly stand at more than 1,950 tonnes.
Russian President Vladimir Putin has taken a special interest in breaking up America’s “exorbitant privilege” in the words of former French President Charles de Gaulle through the dollar hegemony.
In June, Putin urged five major emerging economic powers - Brazil, Russia, India, China and South Africa, known as BRICS - to accelerate developing a system that could replace the dollar.
China, on the other hand, is on a campaign to make the renminbi a global reserve currency and its rising gold reserves could add to world confidence in the currency.
China’s launch of yuan-denominated Shanghai futures in March generated a lot of enthusiasm around the world.
Experts say the new futures contract traded on the Shanghai International Energy Exchange is now on course to become an alternative international oil benchmark not priced in dollars.