The dollar exchange rate rose late last week, recovering from an almost 15-month low, after the US employment report, which is closely watched by market analysts, turned out to be better than forecast. This, in turn, increases the likelihood of a rise in the US Federal Reserve interest rate.
The ICE Dollar Stock Index, which compares the dollar to a basket of six currencies, gained 0.8 percent to reach 93.58. This was the largest daily change since January 18. During the session, it traded at about 92.70, which is its lowest reading since May 2016. The WSJ Dollar Index, which measures it against a broader basket of 16 rival currencies, rose 0.6 percent to reach 86.39 by the end of the day, also offsetting some of its previous losses.
Once Russia decides not to use the American dollar, this currency will be seriously affected. In addition, the countries of the Commonwealth of Independent States will undoubtedly support Russia, according to the Russian Dialogue daily newspaper.
Economists remember well that most of the US currency circulates outside the United States. If Russia and the CIS countries refuse to conduct transactions in dollars, this will cause a chain reaction, and China and other Asian countries will also join Russian policy.
In addition, experts point out that US sanctions against Russia may lead to the fact that the dollar in Russia will disappear, giving way to an alternative currency.
Recent economic trends indicate that China and Russia are gradually paying off government debt, getting rid of dollar reserves. Among the measures to ensure the financial independence of these countries, the most ambitious project to date is the New Development Bank (NDB) of the BRICS group, which includes Brazil, Russia, India, China and South Africa.
NDB, based in Shanghai, was established by BRICS in July 2014 to finance infrastructure and sustainable development projects in the group's and other emerging economies.
In April 2016, the bank's Board of Directors approved seven projects with a total funding of over $ 1.5 billion.
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In addition, starting from July 1, 2017, all Russian banks are required to accept payments made through the national payment system of the Russian Federation "Mir". While developing new software, Russian programmers decided to create algorithms “from scratch”, guided by the currently established standards for payment systems.
Another important advantage is the independence of this system from any external factors. The system uses exclusively domestic software, and its technological and communication infrastructure is isolated from any impact of sanctions.