Friday, March 21, 2014

World Events - Russia and China

One of the outcomes we are starting to see from Russia and Ukraine is that Russia and China are growing closer. Putin is scheduled to go to China in a few months and is expected to sign a deal for Russia to increase its supply of natural gas to China. Russia is the largest supplier of natural gas to the E.U., but with this deal, it will begin to shift from having the E.U. be its largest trading partner, to China taking that position. This will make things very interesting in the future. If Russia does not need to trade with the E.U., what does that mean to global trade and specifically the dollar? Will closer ties with China mean the beginning of the end of the dollar as the worlds reserve currency? Will natural gas (and by extension oil) be sold in another currency other than the dollar? This new growth in the relationship between China and Russia is going to make things interesting indeed.

What do you think?