BANGLADESH TO PAY RUSSIA IN CHINESE CURRENCY INSTEAD OF DOLLARS

Tue 18 Apr 2023:

Bangladesh will pay its outstanding debts to Russia in Chinese yuan rather than dollars. It was announced that Dhaka will pay $110 million in Chinese yuan to Moscow for the currently under construction Rooppur power project.

The development came amid increasing de-dollarisation efforts by the developing nations and calls by BRICS [Brazil, Russia, India, China and South Africa] nation members for a common BRICS currency.

Russia has been blocked from accessing much of the international banking system as a result of US-led sanctions. After months of wrangling, a high-level team from Russia and Bangladesh’s Ministry of Finance decided last week that the bills could be paid in yuan.

“Because of the sanctions against Russian banks, we couldn’t process payments in U.S. dollars. Russia asked us to settle the payments in their currency, rubles, but that was not feasible. So we both opted for yuan,” Uttam Kumar Karmaker, additional secretary of the Bangladesh’s finance ministry’s Economic Relations Division (ERD), was quoted as saying by Nikkei Asia.

The Rooppur power plant, once completed, will be capable of generating 2,400 megawatts of power. It is to be a crucial element of Bangladesh’s plans to generate more energy and reduce its reliance on coal.

China benefits from US-led sanctions against Russia

According to reports, the US-led sanctions blocking SWIFT connectivity to some Russian institutions have cleared the door for China to promote its alternative. In Russia, one of the world’s top energy exporters, Beijing finds an eager partner.

Russian President Vladimir Putin stated in late March, at a three-day bilateral conference with Chinese President Xi Jinping, “We are in favor of using the Chinese yuan for settlements between Russia and the countries of Asia, Africa, and Latin America.”

Since 2017, when the yuan was added to the International Monetary Fund’s Special Drawing Rights (SDR) currency basket, Bangladesh’s central bank has been increasing the proportion of yuan in its foreign currency reserves.

According to data reported by Nikkei Asia, the yuan’s share of the country’s currency reserves increased to 1.32 percent in August from 1% in 2017, while the dollar fell to 75% from 81%.

SOURCE: INDEPENDENT PRESS AND NEWS AGENCIES

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