As Zerohedge reports, the picture that emerges is one in which China has managed to convince Russia to settle oil imports in renminbi and in which the AIIB and Silk Road funds are set to help establish the yuan as the funding currency for billions in development projects.
While we may still be years away from the fabled “yuan hegemony,” we got still more evidence on Tuesday that despite the currency’s rather uncertain medium-term trajectory and despite a still closed capital account, China is moving ever closer to establishing the RMB as a reserve currency.
In August, for the first time, the yuan moved ahead of Japan’s yen for fourth place in a league table of the most-used currencies for cross-border payments compiled by Swift, the international payments provider.
As Zero Hedge reports, Russia is taking de-dollarization a step further by suggesting that a BRICS alternative to SWIFT may be in the cards. This comes as Russia (which, incidentally, is the second heaviest SWIFT user) is set to convene a BRICS summit in Ulfa on July 8-9 where the $100 billion BRICS bank will officially be launched along with a $100 billion currency reserve.
Much like the China-led AIIB, the BRICS bank is in many ways a response to the failure of US-dominated multilateral institutions to meet the needs of modernity and offer representation that’s commensurate with the economic clout of its members.
As AsiaOne reports, Thailand and Russia aim to double annual bilateral trade in 2016 to US$10 billion (S$13.5 billion), Thai Prime Minister Prayuth Chan-ocha said on Wednesday after signing several agreements with Russian Prime Minister Dmitry Medvedev in Bangkok.
Medvedev's visit to Thailand is the first by a Russian prime minister for 25 years, lending high profile international support to a Thai military government that has faced opprobrium from old ally the United States for ousting a democratic government in May.
"We exchanged opinions on how to boost trade to $10 billion next year," Prayuth said in a statement read to reporters after meeting Medvedev.
The two signed five memorandums of understanding on Wednesday to boost co-operation on energy, investment, suppressing drug crime, tourism and culture.
For uber-wealthy Russians, "an apartment in Miami, even the most glorious beachfront apartment, is not a priority right now," warns one real estate attorney, as The New York Observer reports, Russian buyers no longer felt they had the liquid assets to carry on with the transaction and were looking to break closed real estate contracts.
"Your average Russian buyer tends to be someone who works in the $5, $10, $15 million range. Obviously very wealthy people, but also people who are much more likely to feel a pinch given the economic situation and the exchange rate," and with maintenance costs sky-high, the trophy apartments have shifted from 'safe-deposit-boxes' out of reach of sanctions to burdensome drains.
The world was slow to wake up to the new reality in which China is now the de facto IMF sovereign backstop, as Zero Hedge described two weeks ago in "China Prepares To Bailout Russia" when we noted that a PBOC swap-line was meant to reduce the role of the US dollar if China and Russia need to help each other overcome a liquidity squeeze, something we first noted over two months ago in "China, Russia Sign CNY150 Billion Local-Currency Swap As Plunging Oil Prices Sting Putin."
In fact, it was only this week that Bloomberg reported that "China Offers Russia Help With Currency Swap Suggestion." But in order to fully backstop Russia away from a SWIFT-world in which the dollar reigns supreme, one extra step was necessary: the launching of direct FX trade involving the Russian and Chinese currencies, either spot or forward - a move away from purely theoretical bilateral FX trade agreements - which would not only enable and make direct currency trading more efficient by sidestepping the dollar entirely, but also allow Russian companies to budget in Chinese Yuan terms. It is no surprise then that this is precisely the missing step that was announced overnight, and will be implemented starting Monday.
Source: Zero Hedge
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