Fars News Agency in Iran has announced an agreement by a senior Iranian diplomat for Russian and Iran to replace dollars in trade between the two countries. Trade will now be conducted in either rubles or rials. This is another major move by large countries to drop the dollar when trading amongst themselves.
This is in response to moves by the US against Iran, which looks like backfiring.
“The move (imposing sanction on the CBI) is unacceptable. Russians have clearly announced that they will not accept these sanctions and Iran’s nuclear issue is resolvable just through negotiations.”
Iranian President Mahmoud Ahmadinejad hit back at the US after Washington introduced new sanctions against Iran’s central bank.
It was reported last November by Marketwatch that China and Russia had agreed to trade in yuan or ruble.
HONG KONG (MarketWatch) — China and Russia will stop using the U.S. dollar to settle bilateral trade and instead use the ruble or the yuan, though the move is not meant to signal a challenge to the dollar, according to reports Wednesday.
At the end of 2011, the new ASEAN trading block has put further pressure on the dollar. In this article from alt-market discusses moves by China to place itself in a position to trade in a new world without dollars as the worlds reserve currency.
In 2009 and 2010, it became absolutely clear that China (with the help of global corporate entities) was developing the skeleton of a new system; a trade network that had the capacity to supplant the U.S. and end the dollar’s world reserve status.
Since then, Yuan bonds have spread across the planet, China has dropped the dollar in bilateral trade with Russia, the ASEAN trading bloc has formed into a tight shell of export partners, and that is just the beginning. Two major announcements in 2011 have solidified my belief that a complete dump of the dollar by eastern interests is near…
According to alt-market even Japan looks to also drop the dollar within this region.
Japan has indeed entered into an agreement to drop the dollar in currency exchange with China and has expressed interest in melting into ASEAN. Japan has also struck somewhat similar though slightly more limited deals with India, South Korea, Indonesia, and the Philippines almost simultaneously:
Reuters ran a headline in October of China creating a regional bank for ASEAN which sounds more like a Central Bank for the new trading area.
(Reuters) – China is considering a proposal to set up a regional bank to help its small and medium enterprises (SMEs) invest in Southeast Asian neighbors, fund infrastructure projects and promote development in southwestern China, two independent sources said.
After approval by the State Council, or cabinet, China would formally invite members of the Association of Southeast Asian Nations (ASEAN), Japan and South Korea to each take a stake in the ASEAN Bank, said the sources, who have direct knowledge of the proposal.
China, the world’s second biggest economy, is likely to be the bank’s biggest single shareholder with an initial investment of up to 30 billion yuan ($4.7 billion), the sources said, requesting anonymity because they are not authorized to speak to reporters. The other countries’ stakes still must be negotiated.
These moves over the last 3 months do not bode well for the future of the dollar. In fact it now looks as if the East is manoeuvering itself away from the worlds reserve currency and placing itself in a position to trade in a new world.