The currency wars have intensified as Russia is reeling under the economic sanctions pressed by the White House. The Russian local currency Ruble is depreciating against the US dollar dipping to 91.45 on Tuesday. The flow of foreign funds into Russia has dried up and the country is now looking at various options to lift its economy. One option that Russia’s President Vladimir Putin is considering is that of revenge against America’s foreign policy.
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After being re-elected as President, Putin urged the Middle East to stop accepting the US dollar as payments for oil. His comments indicate a tit-for-tat outcome to America’s foreign policy that wreaks havoc on other countries’ economies. Putin stressed that if the Middle East stops accepting the US dollar for oil, the USD currency will become irrelevant.
“If oil producers in the Middle East stop using the US dollar, it will be the end of the dollar,” he said. Read here to know how many sectors will be affected in the US if other countries ditch the dollar for trade.
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Will The Middle East Stop Accepting The US Dollar Currency For Oil and Gas Trade Settlements?
The Middle East will not ditch the US dollar for oil as it is the de facto currency for trade settlements. Cross-border transactions in local currencies for oil incur losses as they don’t provide the stability that the US dollar does. Therefore, Putin’s dream is only a far cry and wishful thinking of a de-dollarized world.
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The reality is different as even nations in the Middle East need the US dollar currency to survive. The US dollar currency strengthens their native economies as most of their local currencies are pegged to the USD. Cutting ties with the US dollar will only hamper their native economies leading to a decline in their GDP.
