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EDB Analysis of the Role of the EAEU Currencies in Global Payments

Friday 29 January 2021

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MOSCOW (EDB press service) — The Eurasian Development Bank published a report titled Promoting the role of the EAEU currencies in global transactions.

Promoting the Role of the EAEU Currencies in Global Transactions (PDF)
The study presented in the report analyzes the role of national currencies in the global economy, and also examines the potential for their further growth. In addition, it notes a fairly active use in trade transactions not only the ruble, but also the tenge.
(Click to download)

The EAEU de-dollarization efforts are directed on a reduction in financial risks due to high volatility on the FX market and on deepening the EAEU integration. Over the past 7 years, the role of the EAEU currencies in the global trade is almost unchanged: they still service around 2% of global trade. Russian ruble has remained among 30th world’s dominant currencies with 1% of total FX turnover.

In the external trade, the share of EAEU currencies in import transactions is around 24%. Apart from that, the role of ruble is relatively high in servicing the trade with Turkey, India, and China, where its share is around 34%, 21%, and 4%, respectively. However, in export flows the share of the EAEU currencies is significantly lower — in 2019, it did not exceed 9%. In general, it reflects the high share of commodities in total exports, justifying a significant level of dollarization. Nevertheless, the EDB analysts are optimistic about de-dollarization going forward, both: in internal and external payments.

As for the EAEU countries, payments in their currencies have notably increased over the past seven years — their share in trade flows jumped from 63% in 2013 to 74% in 2019. At the same time, over the past 5 years, the share of dollar declined from 25% in 2015 to 19% in 2019, while the share of the euro is unchanged at 7%.

Evgeny Vinokurov, Chief Economist at the EDB and the EFSD says:

The Kazakhstan tenge is another currency, which is widely used for servicing trade transactions. It is noteworthy that the use of tenge is relatively high in Kazakh trade with the Kyrgyz Republic, and it has accelerated: while in 2013, the share of tenge accounted for 15%; in 2019 it reached 19%. As for trade with Russia, in 2019, the tenge serviced 5% of trade transactions versus only 2% in 2013. We believe the role of the tenge can potentially be expanded by widening the EAEU integration, e. g. in servicing trade with Uzbekistan.

In 2019-2020, the EAEU countries made some progress in listing their companies’ shares on stock markets. Belarus and Kazakhstan placed ruble-denominated government and corporate bonds on the Moscow Stock Exchange. Concurrently, securities of Russian companies – mainly represented by industries of oil, gas, steel, finance, and trade — are also traded on the Kazakh stock market. The future development of more integrated financial market is expected to contribute to further de-dollarization.

According to Evgeny Vinokurov, the government policy may play important role in promoting national currencies. However, economic growth and trade development are considered as main factors contributing to de-dollarization — with China as a prime example. Since 2008, China promoted the role of the yuan and by 2020, the Chinese currency has become the fifth most traded currency globally. The use of yuan has also increased in the China-EAEU trade: 25% of the EAEU imports from China are now paid in yuan vs only 2% in 2013.

As for the EAEU countries, macroeconomic factors form the foremost challenges for promoting their currencies in trade transactions. One of the key issues is high transaction costs, due to low diversification of exports, unstable macroeconomic positions in a number of countries, and the relatively shallow financial market.

“To promote the role of national currencies, the EAEU countries should focus more on sustainable economic and trade growth, diversification of exports and price stability”, the Chief Economist pointed out. As for operational level, the EDB analysts emphasized the important role of developing financial markets, stock exchanges, and payment systems.


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