August 8, 2022
Chinese President Xi Jinping (C) hosts the 14th BRICS Summit via video link in Beijing, China, June 23, 2022. /Xinhua

Building BRICS

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The shift from the US dollar to the Chinese yuan begins 

Dubai to become financial hub of BRICS trade

According to an exclusive Reuters report released Wednesday, India’s biggest cement producer, UltraTech Cement is importing Russian coal and paying using Chinese yuan, a payment method commodities traders are saying will be the norm going forward.

President Vladimir Putin said at the just concluded BRICS virtual summit hosted by China last week that the BRICS countries – Brazil, Russia, India, China, and South Africa – are currently working on setting up a new global reserve currency. 

“The issue of creating an international reserve currency based on a basket of currencies of our countries is being worked out,” he said at the BRICS business forum. 

The Russian President also stated that member states are also developing reliable alternative mechanisms for international payment for commodities in light of the western sanctions on Russia. To Russia the 3.2 billion people of the BRICS were now a far more important market than the west with its 777 million people.

The Reuters report says that an the Ultratech Cement invoice dated June 5 values the 157,000 tonnes of Russian coal cargo at 172,652,900 yuan ($25.81 million). The cargo’s sale was arranged by Russian SUEK’s Dubai-based unit, which suggests that other companies have also placed orders for Russian coal using yuan payments.

“This move is significant. I have never heard any Indian entity paying in yuan for international trade in the last 25 years of my career. This is basically circumventing the USD (U.S. dollar),” a Singapore based trader told Reuters.

It is a new world order caused by the western sanctions on Russia due to its “special military operation” in Ukraine.

“If the rupee-yuan-rouble route turns out to be favourable, the businesses have every reason and incentive to switch over. This is likely to happen more,” said Subash Chandra Garg, a former economic affairs secretary at India’s finance ministry.

Dubai is now becoming a hub for international trade replacing Singapore and London. Russian coal traders in Dubai are facilitating deals with India as Singpore is wary of western sanctions. India’s energy imports from Russia have risen in recent weeks as traders have offered steep discounts. New Delhi defends its purchases of Russian goods saying a sudden halt would inflate prices and hurt consumers. to Narendra Modi it is BRICS first.

Source Reuters/Xinhua/TASS

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