Russia has announced a significant shift in its trade relations with India and China, with nearly all transactions now conducted in national currencies instead of the U.S. dollar. President Vladimir Putin revealed that over 90% of trade with China is settled in rubles and yuan, while more than 50% of trade with India follows a similar pattern. This change comes in response to Western sanctions imposed after Russia's invasion of Ukraine in 2022, which disrupted access to global financial systems like SWIFT. As a result, Russia has actively pursued local currency settlements, strengthening its economic ties with China and India to bypass traditional financial mechanisms.

Trade between Russia and China has surged, with both countries expanding their "strategic partnership." In 2023, bilateral trade reached a record $240 billion, and economists predict further growth in 2024. More than 90% of this trade is now conducted in rubles and yuan. The yuan’s share in Russia’s exports to China rose dramatically from 0.5% in 2021 to 16% in 2022, and imports from China saw yuan usage increase from 4% to 23%. The U.S. dollar's role in this trade has greatly diminished, dropping from 46.8% in 2021 to almost zero by 2023. Russian banks have also shifted their reserves, with yuan holdings surpassing dollar reserves by December 2023.

India, although slower to adopt this shift, now conducts more than 50% of its trade with Russia in local currencies. This move is part of a broader strategy of "de-dollarization," which Putin has advocated, arguing that the dollar has become a tool for Western political influence. Despite tensions with former U.S. President Donald Trump, who threatened high tariffs on countries moving away from the dollar, Putin has expressed willingness to engage with Trump if he wishes to meet in the future.

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