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Russia drops the dollar

UNCjigga

Lifer
Dec 12, 2000
22,928
5,349
136
Missed this story last week and didn't see it discussed here yet.

While the move is being interpreted by some as "sudden" or a response to Biden's new sanctions, Russia had started down this path back in 2009. I also can't help but wonder if this is another sign we may be reaching peak oil and the end of petrodollars as defacto global standard currency.


Russia is cutting the U.S. dollar from its $186 billion National Wealth Fund as Washington continues to impose sanctions on Moscow.

The move was announced at the St. Petersburg International Economic Forum on Thursday by Finance Minister Anton Siluanov. “Like the central bank, we have decided to reduce investments of the NWF in dollar assets,” he told reporters, according to a Reuters translation, adding that the NWF will instead invest in euro, Chinese yuan and gold assets.

The changes to the NWF are expected to happen within the next month. Once complete, the share of euro assets in the fund is expected to stand at 40%, the yuan at 30% and gold at 20%. Meanwhile, the Japanese yen and British pound will likely make up 5% each.

Timothy Ash, senior emerging markets sovereign strategist at BlueBay Asset Manager, described the decision to ditch U.S. dollar assets as “very political” and one that’s meant to “send a signal” to President Joe Biden’s administration ahead of the upcoming summit with President Vladimir Putin.

“The messaging is ’we don’t need the U.S., we don’t need to transact in dollars, and we are invulnerable to more U.S. sanctions,” he said in a research note after the announcement, adding that it could be interpreted as a sign that Moscow is expecting more sanctions from the U.S.
 

desy

Diamond Member
Jan 13, 2000
5,349
116
106
Petrodollars Definition (investopedia.com)

I think most people don't know what is a petro dollar is and why its a big deal

Advantages and Disadvantages of the Petrodollar
The petrodollar greatly helped to elevate the U.S. dollar's standing in the financial markets, as the price of the most important commodity in the world, oil, was linked to the dollar. This has partly aided the dollar in being the world's most dominant currency, which allows the dollar to continuously finance its account deficit by issuing dollar-denominated assets at very low rates. This has also allowed the U.S. to wield significant control economically over the globe.
 
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Fenixgoon

Lifer
Jun 30, 2003
28,139
3,470
126
Petrodollars Definition (investopedia.com)

I think most people don't know what is a petro dollar is and why its a big deal

Advantages and Disadvantages of the Petrodollar
The petrodollar greatly helped to elevate the U.S. dollar's standing in the financial markets, as the price of the most important commodity in the world, oil, was linked to the dollar. This has partly aided the dollar in being the world's most dominant currency, which allows the dollar to continuously finance its account deficit by issuing dollar-denominated assets at very low rates. This has also allowed the U.S. to wield significant control economically over the globe.
So basically if a critical mass is reached to where the petrodollar is no longer a thing, the dollar is screwed and so are we?
 
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fskimospy

Elite Member
Mar 10, 2006
72,150
22,741
136
So basically if a critical mass is reached to where the petrodollar is no longer a thing, the dollar is screwed and so are we?
No, in fact the whole petrodollar thing is probably bullshit anyway.

If you think the fact that linking oil to the dollar is what lets us borrow at low rates then how can you explain how Japan can borrow at similarly low rates despite having no oil and the yen not being linked to oil markets?
 

Indus

Diamond Member
May 11, 2002
6,790
2,309
136
So basically if a critical mass is reached to where the petrodollar is no longer a thing, the dollar is screwed and so are we?
The Euro is the defacto currency now primarily because of how many countries use it vs ours.
 

cytg111

Lifer
Mar 17, 2008
16,035
5,959
136
Putin is a geopolitical mastermind… and Trump is the exact opposite…. Its been heading this way for a while. While Trump takes the prize, lets not forget Crimea and a red line in some sand somewhere…
 

cytg111

Lifer
Mar 17, 2008
16,035
5,959
136
No, in fact the whole petrodollar thing is probably bullshit anyway.

If you think the fact that linking oil to the dollar is what lets us borrow at low rates then how can you explain how Japan can borrow at similarly low rates despite having no oil and the yen not being linked to oil markets?
Cause they are linked to you.
 

hal2kilo

Lifer
Feb 24, 2009
17,211
4,850
136
Missed this story last week and didn't see it discussed here yet.

While the move is being interpreted by some as "sudden" or a response to Biden's new sanctions, Russia had started down this path back in 2009. I also can't help but wonder if this is another sign we may be reaching peak oil and the end of petrodollars as defacto global standard currency.


Russia is cutting the U.S. dollar from its $186 billion National Wealth Fund as Washington continues to impose sanctions on Moscow.

The move was announced at the St. Petersburg International Economic Forum on Thursday by Finance Minister Anton Siluanov. “Like the central bank, we have decided to reduce investments of the NWF in dollar assets,” he told reporters, according to a Reuters translation, adding that the NWF will instead invest in euro, Chinese yuan and gold assets.

The changes to the NWF are expected to happen within the next month. Once complete, the share of euro assets in the fund is expected to stand at 40%, the yuan at 30% and gold at 20%. Meanwhile, the Japanese yen and British pound will likely make up 5% each.

Timothy Ash, senior emerging markets sovereign strategist at BlueBay Asset Manager, described the decision to ditch U.S. dollar assets as “very political” and one that’s meant to “send a signal” to President Joe Biden’s administration ahead of the upcoming summit with President Vladimir Putin.

“The messaging is ’we don’t need the U.S., we don’t need to transact in dollars, and we are invulnerable to more U.S. sanctions,” he said in a research note after the announcement, adding that it could be interpreted as a sign that Moscow is expecting more sanctions from the U.S.
Economy of Italy. Not concerned.
 

fskimospy

Elite Member
Mar 10, 2006
72,150
22,741
136
Cause they are linked to you.
The real answer is that the whole 'petrodollar' thing doesn't matter and hasn't for a very long time. Essentially every developed country on earth can borrow at extremely low rates regardless of the size of their sovereign debt and regardless of their relationships to global oil markets.
 

kage69

Lifer
Jul 17, 2003
18,044
9,515
136
Economy of Italy. Not concerned.
This.

So the bratva with oil firms who prefer belligerence and aggression instead of diplomacy are pissed at having to answer for their behavior? Awww. Shorty is mad at no G7 invite this time around too I bet. Oh for the days of softheaded blackmailed cuckolds in the White House, right Vlad?
 

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