Russia never misses a chance to square off against the United States. The dollar has long been one of its favorite targets. The message has been simple enough: why keep using the dollar, that tool of American imperialism? Why not settle trade in rubles or Chinese yuan instead, and show the Yankees that the world can move on without them?
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After sanctions hit in the wake of the Ukraine war, and dollar settlement became far more difficult, Moscow even began seriously talking about the yuan as a new “reserve currency.” Russian officials now insist that most trade between China and Russia is settled in rubles or yuan.
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But the reality appears far less heroic. First of all the Chinese authority does not want that their currency be hoarded in someone else’s jurisdiction. And in practice, a web of intermediaries often stands between the two sides, with many transactions reportedly ending up being settled in dollars anyway—only at a steep premium, sometimes around 20 percent (Bloomberg ).
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So, in my next trip to Russia, I will bring with me a lot of US dollars in cash. I willl be given a premium treatment (20% higher) in hotels and restaurants 😁.