Comment by zaik
15 days ago
> if you're the Philippines and you're selling fish to Russia, would you rather have Rubles or US dollars?
I would have assumed the fisherman in the Philippines would like to be paid in Philippine peso.
15 days ago
> if you're the Philippines and you're selling fish to Russia, would you rather have Rubles or US dollars?
I would have assumed the fisherman in the Philippines would like to be paid in Philippine peso.
The fishermen will get paid in pesos but the company will be paid in dollars. And the company will probably put their dollars in a bank outside the Philippines, which only accepts dollars, euros or swiss francs.
If the fishermen could be paid in dollars, they would probably prefer that.
And the fact that they'd prefer that to being paid in Rubles or Renminbi is the underlying guarantor of American economic power... which, if it goes away and was replaced by Chinese power in the south china sea, would be catastrophic for the fishermen as well.
Where does the Russian company get its Philippine Peso from?
Russia overall may have exported some stuff to Philippines but it’s a huge country. The specific company would now need to find a way to acquire a highly illiquid currency available in tiny numbers which would be expensive.
Instead, they simply buy dollars which are highly liquid, available in huge numbers, until now absolutely reliable, and accepted by everyone.
Trading in dollars was at the end of the day cheap.
but it's not easy to come by large amounts of Philippine pesos in Russia, cause no-one wants to hold significant amount of foreign currency they can't use for anything else. In some cases it may even be legally problematic.
That's why international trade uses "strong" currencies, which are very liquid: you can generally get USD/EUR and then trade them for anything else with a limited spread. Good luck converting Hungarian forints to Lao kips.
Being cut off from USD is why news of Russia resorting to barter[0][1] have occurred in the news since they got cut off from the US trading system
[0] https://www.newsweek.com/russia-oranges-trade-barter-pakista... [1] https://www.reuters.com/markets/first-russia-china-barter-tr...
I think that is (used to be) higher risk: Internal events could make the peso lose its value, but the dollar was pretty stable?
(Probably it'd be a pretty big fishing company, exporting to a far away nation like that. Not a single person in a small boat)
Edit: I suppose riffraff's sibling answer is better
For this the Russian buyer would have to previously sell something to the Philippines and accept pesos. Why would they accept those pesos if they are not generally accepted elsewhere?
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