The former enemies in North Asia have agreed to abandon longstanding rules that require cross-border transactions to be conducted in foreign currency — and dollars in particular.

China and Russia previously forced one another’s importers to pay in a third-party currency, usually the dollar. Last year, this dollar trade came to $38.8 billion, and is on track to reach an annualized run rate of $60 billion this year.

However, as of today, this trade may be denominated in rubles or yuan instead of foreign currency. Both countries have allowed citizens to convert from one unit to the other — Russian banks will allow yuan exchange early next month and their Chinese counterparts already support the ruble — and initial tests over the last decade have gone well.

This is not really a game changer in terms of the dollar’s role in either country’s foreign currency reserves. But it does seem to be part of a concerted effort by global players to diversify their trade settlements away from dollars.

Commodities are central here. Russia wants its own commodities exchange to trade oil in rubles, and with a forecast 1 billion barrels of Russian oil flowing into China every year through the new Siberian pipeline, a yuan-ruble oil trade makes sense.

Expect that Russian commodities exchange within a few years. In the meantime, do not expect either China or Russia to dump the dollar outright any time soon. This news is not hurting DXY.

Over the long term, ruble-driven CurrencyShares Russian Ruble Trust (NYSE:XRU) and yuan funds like Market Vectors Chinese Renminbi/USD ETN (NYSE:CNY) can only benefit from this.

Written By Tim Seymour From Emerging Money

Emerging Money provides insightful and timely information about the increasingly important world of Emerging Market investments. CNBC Emerging Markets Contributor Tim Seymour leads the team of Emerging Money to bring you cutting edge global news and analysis.

About Tim Seymour: Tim is a founder of Emerging Money. He is a founder and Managing Partner at Seygem Asset Management, and The Emerging Markets Contributor to CNBC. Seygem Asset Management focuses on investing throughout the global emerging markets asset class. With a view that emerging and developing economies will continue to outpace the economic growth and advancement of developed economies, Seymour has devoted a career to investing in the dominant markets of tomorrow, today. Seymour’s career has included significant experience in both alternative asset management (hedge funds) and capital markets, having launched two hedge funds, and built the largest Russian broker dealer in the USA. Seymour started his career at UBS, focusing on international credit (cash, swaps, forex) in a specialized hedge fund group (New York). Seymour completed the firm’s training program after graduating with an MBA in international finance from Fordham University. Seymour received his undergraduate degree at Georgetown University.

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