China and Russia ditch US dollar

Omkar Godbole FXStreet Contributor

Russia and China are reducing their dependence on the US dollar as a medium of exchange in bilateral trade - a development some experts say could lead to a "financial alliance" between the, as noted by the Nikkei Asian Review.

Key quotes

In the first quarter of 2020, the dollar's share of trade between Russia and China fell below 50% for the first time on record.

The greenback was used for only 46% of settlements between the two countries.

The euro made up an all-time high of 30%, while their national currencies accounted for 24%, also a new high.

Analysts at Goldman Sachs recently warned that the US dollar’s status as a reserve currency is at risk due to ballooning fiscal deficit, a potential shift in favor of inflation at the Federal Reserve amid increased geopolitical hostilities, domestic unrest, and a resurgence of coronavirus.

Author

Omkar Godbole

FXStreet Contributor

Omkar Godbole, editor and analyst, joined FXStreet after four years as a research analyst at several Indian brokerage companies.

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