The central banks of Russia and China have signed an agreement to allow bilateral trade in the national currencies in a move to reduce the two countries’ dependence on the dollar.
Under the agreement Russian and Chinese companies will be able to make payments in rubles and yuans, as well as in the freely convertible currency, the Russian Central Bank said in a statement.
The start of direct currency trading is seen as a result of increasing bilateral trade. China is already Russia’s biggest trading partner, with bilateral trade soaring 50 percent last year to $59 billion. During Chinese President Hu Jintao’s visit to Russia earlier this month the sides agreed to increase two-way trade to $100 billion by 2015 and $200 billion by 2020.
Experts said both countries stand to benefit from switching to trade in their national currencies as companies will not have to pay the dollar conversion premium and will cut risks associated with currency volatility.
Russia has long removed all restrictions on ruble operations and Russian currency exchanges started trading the yuan last year.