Russian and China have decided to use their own currencies for bilateral trade, thus renouncing the U.S. dollar. Both countries will still have to maintain dollars for trade between the U.S. and their countries but we are starting to see the slow chipping away of the U.S. dollar as a reserve currency. This is how I would see it being done, little by little until the U.S. dollar as a reserve currency is really just a distinguished title rather than an advantage. Both countries say the move is not meant to damage the U.S. dollar, rather to protect their domestic economies from the weakening dollar and poor monetary policy. [Read More ...]
Russia has also started to add the Canadian dollar to its reserves so they can begin investing in assets denominated in the Canadian dollar. This is another subtle move out of the U.S. dollar to purchase assets needed. Russia also has its eyes on the Australian dollar, which would give the the ability to purchase from China, Canada and Australia in non-U.S. denominated currency. The more Russia, China and others purchase in other currencies, the more the U.S. reserve currency status is reduced. [Read More ...]
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