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Russian Central Bank Deputy Chairman Viktor Melnikov has served notice on Washington that the world’s second largest energy exporter and world’s second largest economy are about to switch using the dollars in their bilateral trade to denominating their trade in rubles and yuan both to boost bilateral trade and economic cooperation, RIA Novosti news agency reported.
Following the signing of an agreement between Russia’s and China’s central banks Melnikov said, "This agreement allows for settlements through Russian and Chinese banks not only in the freely convertible currencies but also in the yuan and the ruble."
Melnikov added that under the terms of the agreement Russia and China also agreed to boost bilateral trade from its 2010 level of $60 billion to $100 billion within five years and to $200 billion by 2020.
People's Bank of China Deputy Chairman Ma Delun said that the agreement would give china and Russia an opportunity to increase the value of deals in their national currencies and "help bring them closer to international reserve currencies."
Russian exports to China are still dominated by commodities, with oil supplies currently constituting approximately 50 percent of Russian exports to China. In April 2009 the Chinese and Russian governments signed an agreement under which Russia will supply China with 15 million tons of oil per annum for 20 years in exchange for $25 billion in loans to the Russian state-run companies Rosneft and pipeline monopoly Transneft.
By. Joao Peixe, Deputy Editor OilPrice.com
Joao is a writer for Oilprice.com