https://sputniknews.in/20230616/pakistan-buying-russian-crude-oil-in-chinese-currency-is-the-best-choice-says-expert-2510523.html
Pakistan Buying Russian Crude Oil in Chinese Currency is the Best Choice, Says Expert
Pakistan Buying Russian Crude Oil in Chinese Currency is the Best Choice, Says Expert
Sputnik India
Earlier this week, a cargo ship arrived in Pakistan carrying 45,000 metric tons of Russian crude as part of a deal between Islamabad and Moscow. The two... 16.06.2023, Sputnik India
2023-06-16T13:19+0530
2023-06-16T13:19+0530
2023-06-16T13:21+0530
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For cash-strapped Pakistan, the arrival of Russian crude at a discounted price is a big win: if all goes well, Russia will supply Pakistan with one-third of its total oil needs. The recent purchase by Islamabad was bought using renminbi (RMB) in a move away from the US dollar-dominated export payments policy. This transaction represents a tectonic shift from Pakistan’s US dollar-dominated export payments policy.To shed some light on the gradual expansion of the proportion of RMB payments and the shift toward de-dollarization, Professor Qiu Yonghui, research professor at Sichuan University's Institute of South Asian Studies, spoke to Sputnik and said that Pakistan's decision to pay for Russian crude oil in RMB is the best choice.The professor said that energy supply is essential for trade and importing oil from Russia will not only help Pakistan's economy to recover, but is a mutually beneficial arrangement.Pakistan was looking for new sources of energy imports as prices rise internationally. Islamabad was mainly importing crude oil from the UAE, Saudi Arabia and Qatar, but because of the severe economic crisis, Pakistan was short of foreign currency to pay for fuel imports. Hence, the country's leaders approached Russia in an attempt to secure oil at a discount.Energy imports account for most of Pakistan's external payments. The country imports nearly 80 percent of its needs, ringing up an import bill of $13Bln the in 2022-23 yearHence, the crucial timing of getting the discounted Russian crude oil will help stabilize oil prices in Pakistan.However, if Pakistani currency is used for payment, considering Russia's limited imports from Pakistan, this will lead to the same situation as the Indian rupee, that is, it is pointless for Russia to hold the Pakistani rupee.Talking about the characteristics of the Chinese currency and why it is becoming popular in global trade transactions, the professor explained that the RMB is relatively stable, supported by a strong enough economy, and its proportion in international trade is constantly increasing.She further emphasised that although China plans to promote the globalisation of the renminbi in an orderly manner, "Pakistan's use of renminbi to pay for Russian crude is its own choice, and not a decision China has deliberately promoted".It is worth noting that the scope for an alternative currency other than the US dollar, is more possible now than it has been in the past.The US debt ceiling crisis of the past few weeks has also shown the unsustainability of the American-led financial system. The country's attempts to counter its trillions of dollars debt through trade wars, unilateral sanctions and other coercive economic measures have become clear to the rest of the world, especially to the Global South.These US and EU-led trade wars negatively affect countries that aren't involved in conflicts that have led to those unilateral sanctions. Hence, some countries are opting to do business in currencies other than the US dollar.And with the rise of BRICS, there will be more diverse trade opportunities in the near future. At least 19 countries have expressed an interest in joining the BRICS group, a testament to its growing global clout.Furthermore, many economists think that China is a clear leader where development and infrastructure of global finance is concerned, because of its growing economy.Hence, for Pakistan and Russia to conduct trade in Chinese renminbi is a big step forward to achieving fairness in trade and mutually beneficial economics.
https://sputniknews.in/20230510/pakistan-to-buy-oil-from-russia-for-yuan-on-permanent-basis-report-1888075.html
https://sputniknews.in/20230614/pakistan-awaits-lower-petrol--diesel-prices-after-large-discounted-russian-oil-shipment--2472835.html
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Pakistan Buying Russian Crude Oil in Chinese Currency is the Best Choice, Says Expert
13:19 16.06.2023 (Updated: 13:21 16.06.2023) Earlier this week, a cargo ship arrived in Pakistan carrying 45,000 metric tons of Russian crude as part of a deal between Islamabad and Moscow. The two countries decided to settle the payment with China's currency, the yuan renminbi, in a move away from the US dollar.
For cash-strapped Pakistan, the arrival of Russian crude at a discounted price is a big win: if all goes well, Russia will supply Pakistan with one-third of its total oil needs.
The recent purchase by Islamabad was
bought using renminbi (RMB) in a move away from the US dollar-dominated export payments policy. This transaction represents a tectonic shift from Pakistan’s US dollar-dominated export payments policy.
To shed some light on the gradual expansion of the proportion of RMB payments and the shift toward de-dollarization, Professor Qiu Yonghui, research professor at Sichuan University's Institute of South Asian Studies, spoke to Sputnik and said that Pakistan's decision to pay for Russian crude oil in RMB is the best choice.
"China has not deliberately promoted payment in renminbi, but Pakistan's choice to settle its Russian crude debts in China's currency is the best choice for the Pakistani government after considering all aspects," Yonghui said. "How the proportion paid in RMB grows over time is up to the international economic order and financial order."
The professor said that energy supply is essential for trade and importing oil from Russia will not only help Pakistan's economy to recover, but is a
mutually beneficial arrangement.
Pakistan was looking for new sources of energy imports as prices rise internationally. Islamabad was mainly importing crude oil from the UAE, Saudi Arabia and Qatar, but because of the severe economic crisis, Pakistan was short of foreign currency to pay for fuel imports. Hence, the country's leaders approached Russia in an attempt to secure oil at a discount.
Energy imports account for most of Pakistan's external payments. The country imports nearly 80 percent of its needs, ringing up an import bill of $13Bln the in 2022-23 year
Hence, the crucial timing of getting the discounted Russian crude oil will help stabilize oil prices in Pakistan.
During the interview, shedding light on how western powers politicize the dollar, the professor explained, "As we all know, the continuous interest rate hikes of the US dollar have brought financial risks to the world and considering that the country is already in economic difficulties, it is very difficult for Pakistan to choose the US dollar because of its serious shortage of dollar reserves."
However, if Pakistani currency is used for payment, considering Russia's limited imports from Pakistan, this will lead to the same situation as the Indian rupee, that is, it is pointless for Russia to hold the Pakistani rupee.
"Therefore, choosing renminbi in addition to being the best choice for the Pakistani government, may also be a choice that had to be made," Yonghui said.
Talking about the characteristics of the Chinese currency and why it is becoming popular in global trade transactions, the professor explained that the RMB is relatively stable, supported by a strong enough economy, and its proportion in international trade is constantly increasing.
"In fact, Pakistan's trade with China has been in deficit for a long time, and its RMB reserves are also not very rich, but Pakistan's choice of RMB settlement is the result of various factors," according to the professor.
She further emphasised that although China plans to promote the globalisation of the renminbi in an orderly manner, "Pakistan's use of renminbi to pay for Russian crude is its own choice, and not a decision China has deliberately promoted".
"Similarly, how the renminbi is used in international payments and how its use expands, is up to each country, and it is a choice of the international economic and financial order," the professor concluded.
It is worth noting that the scope for an alternative currency other than the US dollar, is more possible now than it has been in the past.
The US debt ceiling crisis of the past few weeks has also shown the unsustainability of the American-led financial system. The country's attempts to counter its trillions of dollars debt through trade wars, unilateral sanctions and other coercive economic measures have become clear to the rest of the world, especially to the Global South.
These US and EU-led trade wars negatively affect countries that aren't involved in conflicts that have led to those unilateral sanctions. Hence, some countries are opting to do business in currencies other than the US dollar.
And with the rise of BRICS, there will be more diverse trade opportunities in the near future. At least 19 countries have expressed an interest in joining the BRICS group, a testament to its growing global clout.
Furthermore, many economists think that China is a clear leader where development and infrastructure of global finance is concerned, because of its growing economy.
Hence, for Pakistan and Russia to conduct trade in Chinese renminbi is a big step forward to achieving fairness in trade and mutually beneficial economics.
