As ‘secret Saudi deal’ increases harm to Russian currency, China intervenes

Vladimir Putin and Chinese President Xi

Vladimir Putin and Chinese President Xi

October 13, 2014

Photo by Handout/Getty Images

Last Friday it was revealed that the purpose behind Secretary of State John Kerry’s visit to Saudi Arabia a few weeks back was to sign a secret deal by which the leading OPEC state would saturate the markets with excess oil and cause prices to fall for the global commodity. This move would have the consequence of causing vast harm to the Russian Rouble, and increase inflation and price instability for the Eurasian state.

However, on Oct. 13 Russia‘s strongest ally and member nation in the BRICS coalition signed its own deal with the Eurasian power to not only help stabilize prices for the beleaguered economy, but increase direct non-dollar trade with a 150 billion currency swap deal through which Russian Roubles are traded directly for Chinese Yuan. This new deal will have the effect of bypassing the dollar and the the reserve currencies overt effects on the Rouble that is part of the ongoing proxy war between America and the East, and also mitigate some of the consequences of the secret Saudi oil program.

China is ready to export agricultural products and oil and gas equipment to Russia, China’s Vice Premier Wang Yang stated Saturday.

“China is willing to export to Russia such competitive products as agricultural goods, oil and gas equipment, and is ready to import Russian engineering products,” Wang Yang said during the 18th session of the Russian-Chinese Commission for the Preparation of Regular Meetings of the Heads of Governments.

And the cherry on top came moments ago when, as if to assure all involved parties that there will be enough capital support on both sides, the PBOC released a surprising announcement that the central banks of China and Russia signed a 3-year, 150 billion yuan bilateral local-currency swap deal today, according to a statement posted on PBOC website. Deal can be expanded if both parties agree, statement says. Deal aims to make bilateral trade and direct investment more convenient and promote economic development in 2 nations. – Zerohedge

The significance of this deal is two-fold. First, by allowing for Russia to have direct trade between themselves and China in their own national currencies, Russia can mitigate some of their escalating price inflation within their country that is a direct result of Saudi Arabia’s overt actions to drive down the price of oil. Secondly, by facilitating the purchasing of Chinese products without the use of the dollar as a middle-man, Russia puts even more pressure on Europe who is hemorrhaging trade that had been a mainstay between the EU and Russia, and which is now accelerating Europe’s path into recession.

As long as oil is denominated in dollars in the global market, the U.S. can and will use its control over the petro-dollar and reserve currency to inflict economic war against any and all nations that do not cede to American national policies. And with the U.S.’s current desire to escalate chaos in both Ukraine and Syria, and to keep Russia out of the picture and unable to protect their new and long-standing allies by disrupting their economy and currency, today’s intervention by China may be the key in allowing Russia to stabilize prices within their economy, and to inflict greater harm to America’s allies who still are beholden to dollar denominated trade.


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