USD loses positions

The role of the dollar in international trade is steadily declining. A lot of countries seriously think and some have already refused to use the dollar in international trade and transition in mutual calculations in national currencies. The main argument of this step is to reduce the countries' dependence on foreign financial tools, in particular the use of the dollar. The intention to strengthen their own currencies compared to those of surrounding countries to reduce the cost of imports necessary for domestic production is not excluded.

Russia and China have similar experience in trade relations. They use the yuan and ruble instead of the U.S. dollar for trading. The Russian and the Chinese explained this step as being necessary to protect their economies from the risks associated with the status of the dollar as the world reserve currency.

The necessity of using national currencies in bilateral trade to boost mutual economic relations was emphasised during last week's phone conversation between the Iranian and Russian Presidents, Mahmoud Ahmadinejad and Dmitry Medvedev. Turkey proposes to abandon the dollar while partaking of Russia's bilateral trade, stressing that it is necessary to create a joint Russian-Turkish bank and carry out all transactions between the two countries through the bank and in the national currency - lira and ruble to accelerate economic relations.

China has records on this initiative. Besides Russia, it signed intergovernmental agreements on calculations in national currencies on trade with Japan, Iran, Belarus and Kazakhstan. This promotes the growth of China's trade with these countries, facilitates inter-bank calculations and allows conducting direct payments and avoids the loss of commission in currency conversion.

Earlier, China signed a similar agreement with Brazil. In turn, Brazil abandoned the dollar in trade transactions with Argentina long ago. According to their mutual agreement, they conduct operations with each other in pesos and reals. However Uruguay became the second country in South America with which Brazil also refused to use the U.S. dollar in trade operations.

Iran has been consistently replacing the dollar with other currencies in trade operations with the outside world for last years. Thus, Iran passed to alternative currencies in oil trade with India, China and Japan. Russia is on a waiting list. The agreements on currency swaps were signed by Japan and India.

Almost all the calculations in oil trade in the world, with the exception of Iran, are made in dollars. About 90 percent of exports fall to oil and oil products in Azerbaijan. The country is not the exception in this line. According to the Azerbaijani State Customs Committee, a freely convertible currency prevails in the export-import operations in Azerbaijan. By late 2011 about 96.16 percent of Azerbaijan's total exports and 78.72 percent of total imports fell to foreign currency.

At present, the world economy is gradually moving from the single currency system (relation to the U.S. dollar) to the domination of several regional reserve currencies. But in any case the U.S. dollar will prevail in the reserves of each country for a long time. It is hard to find an alternative to the dollar. Despite the fact that each country values its currency, it should be noted that the rates of these currencies are unstable and fluctuate. Some of them are not freely convertible currency.


Ellada Khankishiyeva /Trend/