Dollar Still Reigns Supreme for Two Nations at Odds With U.S.

(Bloomberg) -- For all their talk about breaking Washington’s dominance, Russia and Turkey are still pretty hooked on the U.S. currency.

The dollar was the payment currency of choice for 83% of Moscow’s exports to Turkey in the first six months of the year, according to data published this week by the Bank of Russia. About 40% of Russia’s exports to the European Union are also paid in dollars, the data show.

Despite a highly touted push for “de-dollarization” aimed at protecting the economy from U.S. sanctions, Russia’s been slow to shift its global business away from the American currency. A deepening rift between Ankara and Washington has pushed Turkey closer to Russia, culminating in Turkey purchasing a Russian missile-defense system that could lead to it being sanctioned by the U.S.

Russia and Turkey signed a pact earlier this month to increase use of the ruble and lira in payments, according to Russia’s Finance Ministry. Currently Russia pays for about a third of its imports from Turkey in rubles, while the lira’s share in the two countries’ total trade is less than 2%.

Russia is Turkey’s second-biggest trade partner, supplying mainly natural gas and buying cars and agricultural products, among other imports. Turkey will also join Russia’s alternative to the SWIFT payment system, established to counter a U.S. threat to cut countries off from dollar funding.

--With assistance from Andrey Biryukov and Anya Andrianova.

To contact the reporter on this story: Natasha Doff in Moscow at ndoff@bloomberg.net

To contact the editors responsible for this story: Gregory L. White at gwhite64@bloomberg.net, Tony Halpin

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