Russia’s ruble is tanking. It’s dropped 4% against the dollar in just a few days, now sitting at 90.6 per dollar—its weakest level since late May. It’s not a good look for Moscow, but the BRICS boys? They aren’t losing any sleep over it.

Russia’s Central Bank tried to prop up the ruble by jacking up interest rates by 200 basis points to 18% in July 2024. That’s the highest it’s been since they freaked out and pushed it to 20% after Russia decided to roll tanks into Ukraine. 

This move was supposed to support the ruble, but clearly, it’s not enough. Russia’s government is also using some heavy-handed tactics, like making companies sell off foreign currency revenues to keep the ruble from falling even further. 

But let’s be honest—this isn’t exactly foolproof.

The ruble might have seen a brief gain, rising to 82.50 per dollar on the interbank market, but it’s mostly smoke and mirrors. The sanctions slapped on Russia have made trading dollars and euros a messy business. 

Thanks to the U.S., trading on the Moscow Exchange is out, pushing everything to the over-the-counter market. This has turned the trading space into a chaotic mess of varied prices and wild spreads.

Ruble and yuan: A temporary win?

Interestingly, the ruble has managed to claw back some strength against the Chinese yuan, gaining 1.7% and hitting 11.26 on June 19. That’s the strongest it’s been since May 2023. This little victory is mostly because of yuan-denominated export revenues. 

But analysts at Promsvyazbank think the ruble might keep gaining against the yuan, especially if Russia’s Central Bank decides to cut back on yuan sales to handle currency demand from imports. 

Headquarters of the Central Bank of Russian Federation in Moscow

Though while the ruble is playing these games with the yuan, the real story is in the background. The Moscow Exchange’s ban on trading in dollars and euros might end up screwing with yuan trading too. 

Right now, the yuan accounts for more than half of the foreign currency trading in Russia. If things get bad with the yuan, that could spill over into the broader market. 

And let’s not forget, despite all these gains, the ruble is still weaker than before, so this isn’t exactly a win.

BRICS and the dollar: An uneven fight

For years, the BRICS nations have been trying to dethrone the almighty US dollar. They’ve been talking about de-dollarization like there’s no tomorrow. But the greenback doesn’t seem to want to go anywhere. 

As I reported yesterday, USD still makes up 58% of global foreign exchange reserves. Meanwhile, the euro, which comes in second place, only accounts for 21%. 

The BRICS countries have tried to shake things up by creating new cross-border payment systems and pushing for more local currency use in international trade. 

But these moves are barely out of the starting gate and face a ton of challenges, like regulation and liquidity issues.

And let’s not forget that BRICS’ big dream of using local currencies for trade among themselves isn’t exactly shaking the dollar’s throne. 

The trade volume in local currencies between BRICS countries is still too small to make any real dent in the dollar’s dominance. In fact, currencies like the yuan and the Indian rupee have been taking a hit against the dollar. 

The BRICS is still far from being a serious threat to the dollar’s reign. But not too far.