Authored by Antonio Graceffo via The Epoch Times,

Despite sanctions and two wars, the yuan is losing ground, with much of its earlier rise tied to Russia and now reversing.

The Kremlin drafted a memo this year outlining seven areas of potential economic convergence with Washington, including a proposed return to dollar settlement for Russian energy transactions.The stated rationale in the memo is that dollar integration would stabilize Russia’s balance of payments and foreign exchange markets. Russia never actually wanted to transact business in yuan. Moscow only did so because it was cut off from the dollar system by sanctions and had no choice.

The yuan was a fallback, not a preference.Russia’s desire to return to a dollar-denominated trade regimen is an implicit admission that the yuan-based arrangement failed to deliver monetary stability. It also demonstrates Russian President Vladimir Putin’s desire to decrease Russia’s dependence on China. Putin has many ambitions for Russia’s future, but among them is not for Russia to be the No. 2 power in a Beijing-centered world order.

Heading into the U.S.–Iran conflict, many pundits believed it would bring about the demise of the dollar while accelerating the internationalization of the yuan.

Bloomberg ran a piece titled “The Iran War Is China’s Global Payments Debut,” arguing it took four years of preparation after Ukraine, and this war, to make the yuan a serious contender.

The South China Morning Post cited analysts saying disruptions from the war could accelerate a shift in oil trade and threaten the dollar’s long-held dominance.

Deutsche Bank’s FX Managing Director Mallika Sachdeva wrote in March that the Iran war could be remembered as a catalyst for “erosion in petrodollar dominance, and the beginnings of the petroyuan.”

However, none of these predictions came true.

In fact, the Iranian Embassy in Zimbabwe posted that it was time to add the “petroyuan” to the global oil market, and Iran demanded that tankers be allowed passage only if trade was denominated in yuan.

Source: ZeroHedge News