China and Russia have said they are renouncing the U.S. dollar and will instead use domestic currency in bilateral trade, the International Business Times reports. The move comes in an attempt to "protect" their economies.
The IBT reports:
"We agreed to expand the possibilities for application of national currencies during trade and economic contacts," said Russian Prime Minister Vladimir Putin after holding talks with the Chinese premier Wen Jiabao.However, the move is not aimed at challenging the dollar but to protect their economies, as the countries started exploring other options in the wake of the global financial crisis.
With Russian ruble already trading on the Chinese exchange, yuan trade in Moscow is expected to begin in early December.
The bilateral trade between the two countries is estimated to reach above $50 billion by the end of 2010, according to the Russian government. A major chunk of the trade is transacted in US dollars currently.
UPDATE:
Damon Vickers from Nine Points Capital Partners appeared on Glenn Beck's radio show this morning to talk about the story, and believes the decision by China and Russia shows just how dire the fiscal situation is in the U.S. He even talks about how printing money, as the U.S. has done recently with QE2, is usually the last step before a financial collapse:
