Yuan Replaces Dollar as Most Used in Russia

New Currency Composition of Official Foreign Exchange Reserves (COFER) data indicates that more transactions taking place inside Russia are now in the Chinese yuan than the U.S. dollar. While media outlets have suggested a “dethroning” there is not a serious concern for the greenback yet. Threats to the dollar are increasing. Even so, the U.S. dollar is by far the most used currency in the world. Dollar reserves worldwide are nearly three times larger than its nearest competitor, the euro. The yuan is barely noticeable internationally, with the dollar outstripping it by more than twenty times in foreign exchange reserves.

If the trend continues, Russia and China will engage in more bilateral trade and the ruble and yuan could take on additional significance. Russia has urged Asia, Latin America, and Africa to accept Chinese yuan. This could be seen as an extension of the “no limits” partnership the two countries announced in 2022. China has enjoyed discounted Russian gas since the sanctions took effect following the opening of the Ukraine war.

Oil and BRICs

Many have declared that the BRICs nations could institute and maintain a competing monetary and trade system, but as yet the attempt is in its infancy. The U.S. also maintains large oil reserves, but had held off on new drilling due to ESG goals. That has changed. President Biden, despite his green agenda and apparent distaste for the use of oil, approved the Willow Project on the North Slope of Alaska, setting off environmentalists who cried foul over a president they thought would shift toward green energy. Climate activists worry climate change could be accelerated. About 9 million tons of carbon would be released each year once the Willow Project is up and running. Republican Senators found a rare instance of agreement with Biden, as Rep. Murkowski declared, “We finally did it.” Republicans were less enthusiastic about the additional measures to prevent drilling in Alaska, which came in tandem with the approval. However, concessions to Biden’s environmentally-minded base did little to slow the pushback and expected legal challenges. It is not clear if Biden had the authority to halt the project, and some speculate he was forced to greenlight it or face losing in court.

Biden drew down the Strategic Petroleum Reserve by 180 million barrels since the pandemic began and has since been attempting to replenish it. The ConocoPhillips project will cede 68,000 acres that was initially targeted for development. CEO and Chairman Ryan Lance said, “Willow fits within the Biden Administration’s priorities on environmental and social justice, facilitating the energy transition and enhancing our energy security, all while creating good union jobs and providing benefits to Alaska Native communities.”

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