The Russian attack on Ukraine has resulted in a series of economic sanctions imposed by allies of the North Atlantic Treaty Organization, aimed at isolating Russia from the global economy.
These sanctions have had a devasting impact on the value of the Ruble, which on March 7, 2022 was roughly estimated as 150 to the US Dollar. This impacted the purchasing power of Russian citizens and various multinational companies pulled out their products, services and jobs from Russia.
THE REBOUND OF THE RUBLE
However, events took a sudden turn when President Putin announced that other nations will have to pay in Rubles for imports of Russian gas, thereby exploiting the dependence of the world economy on the supply of oil and gas from Russia. Further, the export of 200 products belonging to various sectors like telecom, medical, vehicle, agriculture, electrical equipment, etc. were banned. Also, to prevent the outflow of foreign investment and wealth, interest payments to foreign investors who were holding government bonds was blocked and Russian firms were banned from paying overseas shareholders. A limit was set on withdrawal of foreign cash in excess of USD 10,000.
Further, other than oil and gas supply, Russia also controls half the world’s palladium which is a critical for input for the production of semiconductor chips. Production capacity of automobile industry has already been impacted due to export restrictions imposed by Russia.
To Putin’s advantage, stronger trade relations with China have also encouraged Yuan-Ruble trade which has further undermined position of the US Dollar. Moreover, Russia has a strong footing in the world economy independent of the US Dollar  as 30% of Russian foreign exchange reserves are invested in Euros, with 10% reserves in Germany and France each. Further, Russia has invested 23% of its reserves in gold and 13% in Yuan. China is also disinvesting in the US Dollar and its share has fallen from 80% to 30% since 2005.
In the short term, it appears that Russia has been able to show it being defending itself from unprecedented levels of sanctions imposed by the US and its allies. One of the reasons for this is that while economic sanctions have an impact after a long time however, restricting supply of natural resources like oils and gas have immediate impact on the economy. Even though the EU and UK had planned to phase out its dependence on Russian resources these measures cannot be taken immediately without affecting one’s own economy.
However, many view the resilience of the Ruble as symptomatic of a larger trend. For instance, the global trend of countries maintaining the reserves of the country with whom they trade the most or borrow, has further dented the dominance of the US Dollar. Even, Saudi Arabia is considering pricing its oil sales to China in Yuan. One of the reasons for the shift from the US Dollar is that China is the biggest importer of crude oil from Saudi Arabia. However, this shift may have also been influenced by Saudi Arabia’s frustration with the US Government on account of a nuclear deal with Iran or distrust on account of seizure of Russian and Afghani reserves in US dollar.
This trend was also noticed when the New Development bank, which is co-owned by 5 BRICS nations i.e. Brazil, Russia, India, China and South Africa, in 2019 had decided to place more reliance on local currencies by funding 50% of its project in local currencies instead of USD.
In the same vein, even India is intending to trade independent of US$ and is considering making Yuan a reference currency for Rupee-Ruble trade. India being the third largest importer of oil in the world, is trying to get oil at discounted rate from Russia. As part of the arrangement, India will be making payment in Ruble and Indian exporters will be paid in Rupees instead of US Dollars.
Further, India has approved various currency swap like USD 75 billion worth swap with Japan and USD 400 million worth swap with other South Asian countries.
Therefore, even though the US Dollar is currently dominating the world economy, this dominance is being challenged by the emergence of other currencies that are independent of the US Dollar. The trend of trading in local currency seems appealing as it provides economic immunity from international events. However, will this regionalization be able to provide stability to local currency in long run? Will it prove to be more beneficial for trade? Further, will this regionalization be able to gain recognition from countries all over the world particularly the west?
KEY TRADE REMEDIAL UPDATES
|USA (Department of Commerce/International Tarde Commission)|
|Oil Country Tubular Goods||Vietnam
|Antidumping Duty (AD) Administrative Review
AD Administrative Review
|Final determination of sales at less than normal value|
|Heavy Walled Rectangular Welded Carbon Steel Pipes and Tubes||Korea||AD Administrative Review||Final determination of sales at less than normal value|
|Cold-Rolled Steel Flat Products||Indonesia||Countervailing Duty (CVD) Administrative Review||Final determination of existence of countervailable subsidies|
|Polyethylene Terephthalate Resin||China & India||Continuation of CVD||Final Affirmative determination of likelihood of continuation or recurrence of countervailable subsidies|
|EU (European Commission)|
|Graphite Electrodes||China||AD||Imposition of definitive AD Duty|
|Superabsorbent Polymers||Korea||AD||Imposition of definitive AD Duty|
|Okoumé Plywood||China||AD||Initiation of an expiry review of AD measures|
|Hot-rolled flat products of iron, non-alloy or other alloy steel||China||AD||Initiation of an expiry review of AD measures|
|UK (Trade Remedies Authority)|
|Steel||Russia & Belarus||Tariff Rate Quota (TRQ) review of steel imports||TRA will assess whether the tariff rate quotas for Russia and Belarus should be re-allocated to avoid a potential shortage of steel in the UK|
|Ironing Boards||Turkey||CVD||Initiation of anti-subsidy investigation|
|Hot Rolled Flat and Coil steel||China||AD & CVD||Initiation of transition reviews into AD & CVD measures|
NON-TARIFF BARRIERS OF INDIA
SANCTIONS AND EXPORT CONTROL
 FACT SHEET: United States, European Union, and G7 to Announce Further Economic Costs on Russia; The White House Statements and Releases; March 11, 2022: available at:
https://www.whitehouse.gov/briefing-room/statements-releases/2022/03/11/fact-sheet-united-states-european-union-and-g7-to-announce-further-economic-costs-on-russia/ ; What sanctions are being imposed on Russia over Ukraine invasion?, BBC News, March 24, 2022; available at: https://www.bbc.com/news/world-europe-60125659
 As ruble rebounds, some question impact of sanctions against Russia, PBS News Hour, March 31, 2022; available at: https://www.pbs.org/newshour/world/as-ruble-rebounds-some-question-impact-of-sanctions-against-russia
 Supra Note 4 at 1.
 Supra Note 1 at 1.
 Possible End to Dollar Dominance?: Permanent Alterations to the World Order Post-Ukraine, The Wire, March 07,2022; available at: https://thewire.in/world/possible-end-to-dollar-dominance-permanent-alterations-to-the-world-order-post-ukraine
 Russia sanctions threaten to erode dominance of US dollar, says IMF, Financial Times, March 31, 2022; available at: Russia sanctions threaten to erode dominance of US dollar, says IMF | Financial Times (ft.com)
 Supra Note 8 at 2.
 Supra Note 8 at 2.
t Supra Note 2 at 1.
 Supra Note 9 at 2.
Saudi Arabia in talks to use Chinese yuan in oil deals: Report, CNBCTV18, March 16, 2022; available at: https://www.cnbctv18.com/energy/saudi-arabia-in-talks-to-use-chinese-yuan-in-oil-deals-report-12852482.htm
 BRICS Bank To Move Away From US Dollar Loans, Silk Road Briefing, August 06, 2019; available at: https://www.silkroadbriefing.com/news/2019/08/06/brics-bank-move-away-us-dollar-loans/
Russia, India exploring payments options to continue trade amid sanctions; yuan on the table, CNBCTV18, March 16, 2022; available at: https://www.cnbctv18.com/economy/russia-india-exploring-payments-options-to-continue-trade-amid-sanctions-yuan-on-the-table-12824322.htm
 Bypassing the Dollar: The Rise of Alternate Currency Systems, The Wire, March 07,2022; available at: Bypassing the Dollar: The Rise of Alternate Currency Systems (thewire.in)