Pakistan-Russia trade in RMB, the beginning of de-dollarisation movement: Experts

By Tahir Ali | Gwadar Pro Jun 14, 2023

ISLAMABAD, June 14 (Gwadar Pro) - On June 11, Pakistan received its first shipment of Russian crude oil, a cargo carrying 45,000 metric tonnes, in the southern city of Karachi. The payment for this historic strategic international partnership, based on G2G, was made in Chinese currency RMB, according to an official statement. Leading Pakistani economists believe this move will decrease Pakistan's reliance on the US dollar, marking the beginning of an international de-dollarization movement. 

State Minister for Petroleum, Musadik Malik, termed the arrival of the first Russian oil cargo in 75 years as a "major development" on Tuesday (June 13). He stated, “We have purchased 100,000 tons of Ural (second lighter crude oil) from Russia”. The arrival of this cargo signifies the beginning of a continued import of crude oil from Russia. “Our target is to import one-third of our required oil from Russia, and we intend to pass on the discount to the consumers."

In an interview with Gwadar Pro, Professor Dr. Ashfaque Hassan, Dean of Business School, National University of Science and Technology (NUST), Islamabad, echoed Malik's ideas. He called the purchase of Russian crude oil in RMB a "major development", saying it would reduce Pakistan’s "dependence on the dollar". He further added, “This is the first time that in international trade we are using Chinese currency as a currency of international settlement or trade settlement; this is just the beginning from the Pakistani side."

Dr. Hassan also noted that many other countries were also trading using currencies other than the US dollar. He stated, “This is part of the de-dollarisation move which is going on at the international level; the United States has been using economic sanctions as an instrument of war or punishment to the developing countries. I think this is just a reaction to that."

The business deal between Moscow and Islamabad in RMB, according to him, should serve as a wake-up call to the United States, hopefully curbing the use of economic sanctions as a war tactic. 

Dr. Zilakat Khan Malik, a renowned economist at the Department of Economics, University of Peshawar, says that trading between Russia and Pakistan in RMB will "definitely reduce the burden of dollars" on Pakistan. He told Gwadar Pro, “Pakistan and China have good trade relationships; it will be beneficial for the country if payments are made in the respective currencies of these countries instead of dollars."

Zilakat Malik also revealed that Pakistan, China, Iran, and Russia recently signed an agreement to conduct trade via a barter system, exchanging goods for goods and eliminating currency involvement. He applauded this initiative taken by the countries involved. 

Dr. Muhammad Abdul Kamal, an economist at Abdul Wali Khan University Mardan, also expressed his opinion to Gwadar Pro, saying all business activities between China and Pakistan should be conducted in RMB, which is more stable than the US dollar. He believes that an RMB-based payment system has the potential to significantly boost Pakistan's export competitiveness. 

According to Mr. Kamal, Pakistan is currently grappling with a severe balance-of-payments crisis. Trading in RMB is a strategy to reduce the country's dependence on the US dollar. He noted, “This move comes at a time when Islamabad's currency reserves are rapidly depleting, and the rupee is under pressure from mounting imports.”


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