Russia and Ethiopia Move to Trade Without the US Dollar

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Key Takeaways

• Russia and Ethiopia agreed to use ruble and birr for bilateral trade, reducing reliance on the US dollar.
• Discussions to finalize this local currency trade plan were confirmed on February 15, 2025, with both countries showing commitment.
• The move aligns with BRICS’ broader de-dollarization efforts, potentially reshaping global trade if widely adopted.

Russia 🇷🇺 and Ethiopia 🇪🇹 have recently taken a bold step towards reducing their reliance on the US dollar. The two countries, both members of the expanded BRICS group, have agreed in principle to use their local currencies—the Russian ruble and the Ethiopian birr—for bilateral trade. This decision is part of a broader trend within BRICS to find alternatives to the dollar-dominated global financial system.

A Commitment to Local Currencies

Russia and Ethiopia Move to Trade Without the US Dollar

On February 15, 2025, reports confirmed that Russia and Ethiopia are in discussions to finalize a trade arrangement that would move cross-border transactions away from the US dollar. Although this initiative is still in its early stages, Ethiopian Ambassador to Russia, Genet Teshome Jirru, emphasized the mutual interest in transitioning to national currencies. “This cooperation is in its infancy,” the ambassador noted, but both countries appear committed to growing this partnership over time.

This shift aligns closely with the efforts of other BRICS nations, which have been exploring different ways to reduce their dependence on the US dollar. The move by Russia and Ethiopia follows similar agreements within BRICS, such as the recent trade deal between India and Indonesia that also bypasses the US dollar in favor of local currencies. For Russia and Ethiopia, this collaboration is about more than trade—it’s part of a larger strategy to foster financial independence for BRICS nations as a whole.

The Bigger Picture: De-Dollarization in BRICS

BRICS, which stands for Brazil 🇧🇷, Russia 🇷🇺, India 🇮🇳, China 🇨🇳, and South Africa 🇿🇦, has taken clear steps toward de-dollarization in recent years. These efforts gained momentum in 2022 as member states sought to challenge the dominance of the US dollar in global finance. While the success of these initiatives is far from guaranteed, the decision by Russia and Ethiopia could serve as a template for other countries looking to follow suit.

The idea of de-dollarization isn’t new, but it’s gaining traction in part due to geopolitical tensions and economic strategies aimed at diversifying financial systems. By trading in local currencies, countries can reduce exposure to fluctuations in the value of the US dollar, limit reliance on dollar-based banking systems, and ultimately strengthen their domestic financial infrastructures.

The potential impact of such moves extends beyond individual countries. If more BRICS members adopt similar agreements, it could gradually reshape global trade dynamics. For now, Russia and Ethiopia’s decision to trade in ruble and birr has captured significant attention as a step toward reducing the US dollar’s influence in international economic transactions.

Challenges and Controversies

Despite the enthusiasm among BRICS members, these steps toward de-dollarization come with challenges. For one, the move has drawn a strong response from US President Donald Trump. In early December 2024, Trump issued a statement on Truth Social, threatening to impose 100% tariffs on countries promoting alternatives to the US dollar. His message was clear: “We require a commitment from these countries that they will neither create a new BRICS currency nor back any other currency to replace the mighty US dollar or they will face 100% tariffs and should expect to say goodbye to selling into the wonderful US economy.”

The Kremlin, however, dismissed these threats. Dmitry Peskov, spokesperson for the Kremlin, argued that the global shift toward national currencies could actually gain momentum if the US escalates economic pressure. Peskov’s statement pointed to an underlying reality: as countries face sanctions or trade restrictions tied to the US dollar, the appeal of alternative financial systems increases.

Emerging Alternatives: The BRICS Bridge

One of the most ambitious proposals to emerge from BRICS is the development of the BRICS Bridge multisided payment platform. This system, revealed in March 2024, aims to streamline financial transactions among member states, replacing the need for SWIFT—a global payment network often tied to the US dollar. The BRICS Bridge would use central bank digital currencies to enable direct payments between nations, creating a more autonomous financial ecosystem for BRICS members.

Another topic of discussion has been the creation of a shared BRICS currency. The idea of a “Unit,” potentially backed by gold, was brought up at the 2024 BRICS Summit in Kazan, Russia. While the proposal has sparked interest, no concrete plans or launch dates for a BRICS currency have been announced as of February 2025. The complexity of introducing a shared currency and gaining agreement among diverse economies like India’s and Russia’s means such a project would take years, if not decades, to materialize.

US Dollar’s Endurance

While de-dollarization efforts reflect a growing desire for alternatives, the dominance of the US dollar is by no means over. According to a study by the Atlantic Council’s GeoEconomics Center, the US dollar remains the most widely used currency for global reserves, transactions, and trade invoicing. As of mid-2024, the US dollar accounted for 59% of global central bank reserves, though this figure has dropped from 72% in the years following World War II.

For all its challenges, the dollar’s resilience comes from its widespread adoption and the stability of the US economy. Most countries continue to see the dollar as a secure, reliable means of conducting international transactions, and replacing it entirely would require overcoming significant hurdles.

Looking Ahead

The decision by Russia and Ethiopia to use local currencies for their bilateral trade illustrates a key moment in the push for financial independence among BRICS nations. Yet, this step is far from the endgame. De-dollarization efforts will depend on factors such as the stability of BRICS currencies, the success of alternative payment systems like BRICS Bridge, and how willing other nations are to follow this path.

India, for instance, has taken a more measured approach. While it has signed agreements with multiple countries to facilitate local currency transactions, Indian policymakers continue to acknowledge the role of the US dollar in global finance. India’s cautious stance reflects a broader hesitation among some BRICS members to fully abandon the dollar without robust alternatives in place.

As countries like Russia and Ethiopia take the lead, the global financial landscape may gradually evolve. However, this evolution will unfold over years, if not decades, and the dominance of the US dollar is unlikely to fade anytime soon. For now, the commitment of these two nations highlights the ongoing shifts within BRICS and their broader implications for international trade.

For readers interested in understanding more about national currency agreements and how they differ from traditional trade routes, visiting the official BRICS Summit website would provide further details and updates about these emerging trends. As reported by VisaVerge.com, developments like these are crucial in shaping the future of global commerce and financial systems.

In conclusion, while the US dollar remains a central pillar of the international financial system, strides towards de-dollarization—like the agreement between Russia and Ethiopia—signal a growing curiosity about alternative economic arrangements. How these efforts will unfold remains to be seen, but they underscore a collective desire within BRICS to rethink the global currency framework.

Learn Today

De-dollarization → The process of reducing reliance on the US dollar in international trade and financial transactions.
BRICS → A group of emerging economies: Brazil, Russia, India, China, and South Africa, aimed at economic cooperation and policy coordination.
National Currencies → Local, government-backed monetary systems used within individual countries, such as the ruble (Russia) or birr (Ethiopia).
SWIFT → A global payment messaging network often used for international bank transactions, typically tied to the US dollar.
Central Bank Digital Currencies (CBDCs) → Digital forms of national currencies issued and regulated by a country’s central bank to enable secure online transactions.

This Article in a Nutshell

Russia and Ethiopia Challenge Dollar Dominance

Russia and Ethiopia, BRICS allies, aim to bypass the US dollar in trade by using their local currencies—ruble and birr. This bold step symbolizes rising global interest in de-dollarization. While challenges remain, such moves by BRICS nations seek financial independence, potentially reshaping global trade. Can alternatives to dollar dominance truly emerge?