Russia is continuing efforts to ditch the U.S. dollar from its energy export deals, the country’s economic development minister Maxim Oreshkin said in an interview with the Financial Times on Sunday.
“We have a very good currency, it’s stable. Why not use it for global transactions?” Oreshkin said. “We want (oil and gas sales) in rubles at some point,” he said.
“The question here is not to have any excessive costs from doing it that way, but if the broad … financial infrastructure is created, if the initial costs are very low, then why not?” the minister added.
Despite less than 5 percent of Russia’s $687.5 billion in annual trade being with the U.S., it remains that over half of that trade still relies on the dollar, according to Bloomberg figures.
But U.S. sanctions now routinely delay Western companies’ business with Russia, given they have to check with Washington over whether those transactions are allowed.
Already, Russia’s largest oil company, Rosneft, has ditched the dollar in new oil trades, and that’s only the beginning. Still, the move is not without risks, as the first year of the experiment in diversifying away from the U.S. dollar cost Russia about $7.7 billion in potential returns, according to Bloomberg.
Russia’s central bank added exposure to underperforming currencies such as the euro and yuan just as it missed out on a 6.5% rally in the greenback. If it had maintained the previous dollar-heavy structure of it $531 billion reserves, gains for the year through March would have totaled around 3.8%, Bloomberg wrote.
After two waves of U.S. sanctions in 2014 and 2016 — related to the annexation of Crimea and alleged U.S. election interference — Washington most recently barred its banks from buying sovereign Eurobonds directly from Russia, to which Russia’s finance ministry responded by saying it would sell more debt to investors from Asia and Europe.
