Russian President Vladimir Putin on Thursday said using the dollar as a tool of foreign policy is “one of the biggest strategic mistakes” by the US.
“It damages the US economy, undermines the power of the United States across the world,” he said in a televised interview with conservative talk show host Tucker Carlson on his network. It was Mr Putin's first interview with western media since the Russia-Ukraine war began in February 2022.
He said US imposition of restrictive measures on certain countries by limiting transactions, freezing assets and more, sends the wrong signal. “It is the main weapon used by the United States to preserve its power across the world,” Mr Putin said in the interview that covered Russia’s invasion of Ukraine, Nato expansion and the billionaire Elon Musk.
Also on Thursday, the US Treasury said it had initiated barring the import of certain categories of diamonds mined in Russia. It also imposed sanctions on three groups based in the UAE and a tanker registered in Liberia for breaching a price cap on Russian oil, issued by western nations.
These sanctions will put a freeze on any US assets of those targeted and prevent Americans from dealing with them.
Mr Putin said this type of foreign policy is leading to a global downsizing of dollar reserves, even by US allies, as countries seek to protect themselves.
The US's heavy-handed approach to exerting its influence comes at a time when the world is transitioning towards a multipolar paradigm, said Amro Zakaria Abdu, a global financial markets strategist based in the UAE.
These moves are “paving the way for potential alternatives such as bilateral swap lines, Central Bank Digital Currencies, or even a new multinational currency facilitated by regional trade blocs like the Brics”, he told The National.
For example, China and the Saudi Central Bank signed a currency swap agreement valued at $6.93 billion in late November. Before that, in March China carried out the first yuan-settled energy deal for about 65,000 tonnes of Emirati liquefied natural gas.
This represents a growing trend that is being accelerated by the US wielding its influence on the dollar-dominated global financial system with increasing force, Mr Abdu said.
During the interview, Mr Putin said 80 per cent of Russian foreign trade transactions were made in US dollars and euros until 2022, with US dollars accounting for about 50 per cent of transactions with other countries. Now, it has decreased by 13 per cent while the use of other currencies has increased, he added.
“Our transactions in yuan accounted for about 3 per cent [in 2022]. Today, 34 per cent of our transactions are made in roubles and about as much, a little over 34 per cent, in yuan,” he said.