Global Trade Review
Trade de-dollarisation has for many years been the last resort for countries subjected to trade restrictions. Today, as the US’ global ties continue to crumble as the result of an often-antagonistic trade policy on the part of President Donald Trump, a growing — and increasingly powerful — group of countries are looking at ways to trade without the dollar, reaching what could become a critical mass.
On Monday, standing shoulder-to-shoulder with Iran’s foreign affairs minister Mohammad Javad Zarif at the sidelines of the UN General Assembly, Federica Mogherini, the EU’s high representative for foreign affairs, announced the creation of a special purpose vehicle (SPV) designed to allow trade with Tehran in euros. The UK, France and Germany have said they will put the SPV into practice, with China and Russia also agreeing to lend their support.
At a trilateral meeting on September 7, Turkey, Russia and Iran announced a joint step towards dropping the dollar in trade in favour of national currencies. It came after the lira fell to an all-time low against the dollar following the Trump administration’s doubling of import tariffs on Turkish steel and aluminium.
Meanwhile, China is using its trillion-dollar-worth Belt and Road Initiative as a tool to internationalise the renminbi — Pakistan and Iran have already announced they will transact in yuan terms instead of dollars — and India has agreed to pay for Iranian oil in rupees through its state-run UCO Bank.