Russia and Ethiopia Deepen Currency Ties Amid Growing Global Dedollarization
As the global shift away from the U.S. dollar gains momentum, Russia and Ethiopia are strengthening their economic ties by increasing trade in their respective national currencies. This move is part of a broader trend among nations seeking to enhance economic stability, reduce dependency on foreign exchange, and protect trade from geopolitical risks.
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Russia and Ethiopia Expand Currency Cooperation
Ethiopian Ambassador to Moscow, Genet Teshome Jirru, has emphasized that while the transition is in its early stages, both nations are committed to expanding currency-based trade. In a recent interview with Tass, he stated:
“This process between Russia and Ethiopia is still in its early stages, so it is too early to provide precise statistics. But both sides are clearly interested in trading in national currencies, and this cooperation will develop over time.”
This initiative reflects Ethiopia’s growing economic relationship with Russia, particularly following its recent BRICS membership in January 2024. By reducing reliance on the U.S. dollar, both nations aim to create a more resilient and predictable financial environment.
The Economic Benefits of Trading in National Currencies
Trading in local currencies offers several economic advantages, particularly in minimizing financial risks and lowering transaction costs. According to Ambassador Jirru, even in the absence of international sanctions, the use of national currencies in trade remains a cost-effective strategy. He explained:
“Even if there were no sanctions, trade in local currency is always very profitable.”
Some of the key benefits include:
✅ Lower Transaction Costs – Eliminating the need for currency conversions reduces fees and expenses associated with foreign exchange.
✅ Protection Against Currency Fluctuations – By avoiding the U.S. dollar, businesses minimize exposure to exchange rate volatility.
✅ Economic Predictability – Conducting trade in national currencies allows for more stable and predictable financial transactions.
Furthermore, reliance on foreign currencies often introduces uncertainty and inflationary pressure, as speculative trading can drive up costs. By shifting to local currencies, both Russia and Ethiopia seek to establish stronger economic sovereignty while reducing exposure to global market fluctuations.
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Ethiopia’s Growing Role in BRICS and the Dedollarization Trend
Ethiopia’s deepening ties with Russia are part of a broader geopolitical and economic shift. Following its BRICS membership, Ethiopia now joins other nations—including Brazil, Russia, India, China, South Africa, Egypt, Iran, the United Arab Emirates (UAE), and Indonesia—in exploring alternatives to Western financial systems.
The BRICS bloc has actively pursued dedollarization in recent years, promoting trade in national currencies and seeking independent financial mechanisms to reduce reliance on the U.S. dollar. Ethiopia’s inclusion in BRICS enhances its economic prospects by fostering trade, investment, and infrastructure partnerships within the bloc.
By aligning with Russia and other BRICS members, Ethiopia is positioning itself as an emerging player in the global economy, while benefiting from reduced financial vulnerabilities associated with reliance on Western-dominated banking systems.
Russia’s Expanding Trade Partnerships
Russia has been actively strengthening economic alliances that prioritize national currencies, particularly as Western sanctions continue to restrict its access to traditional financial networks.
By shifting to local currency trade agreements, Russia not only reduces its dependency on the dollar but also reinforces strategic economic partnerships with nations like Ethiopia. This bilateral approach fosters economic independence while reducing risks associated with global financial instability.
Conclusion
As dedollarization accelerates, Russia and Ethiopia’s efforts to trade in national currencies mark a significant step toward financial self-sufficiency and resilience. Ethiopia’s participation in BRICS further reinforces this shift, aligning the country with other emerging economies striving for monetary independence.
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With global economic dynamics evolving, the move away from the U.S. dollar is expected to reshape international trade, creating new financial ecosystems that prioritize economic stability and reduced dependency on Western financial institutions.
