For the first time, Pakistan paid off a government-to-government (G2G) deal using Chinese currency, the RMB.
Pakistan’s Petroleum Minister said on Monday that they purchased the equivalent of 110,000 U-S tons 100,000 tonnes of Russian crude oil in April. And now nearly 50-thousand of them have been shipped to their Karachi port.
This deal offers a respite for Pakistan. The country is facing financial challenges and energy shortages and its central bank’s foreign exchange reserves are struggling cover just a month’s worth of controlled import costs.
The minister didn’t give further details about the China deal including the price or the discounts that Russia offered.
Moscow has been seeking alternative buyers after the European Union barred imports of Russian oil. That discount oil flooded Asian markets at a price far below the West’s $60 price cap.
Also worth noting, Beijing is driving the RMB also called the yuan, toward international use.
Early in March, the Chinese yuan beat out the U.S. dollar as the most widely-used currency for China’s cross-border transactions.
Though data from the banking system SWIFT showed the yuan’s share of global transactions still remains low, at 4.5 percent in March. That’s compared to the dollar’s share calculated at 83.7 percent.
Even though the use of Chinese currency in international transactions still occupies a small percentage, it has been on the rise. Pakistan’s recent purchase with Russia is yet another alert for the financial world regarding China’s global ambitions.