Facing sanctions from the West over its alleged role in Ukraine, Russia is realigning its economy towards the China and the East.

The central banks of both Russia and China agreed on August 8th to draft currency swap agreement. This would the cut the dependence of Sino-Russian financial transactions on the American dollar and increase the use of domestic currencies in trade.

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The American dollar (USD) is currently the preferred currency used in international trade. A deal between India and Japan would still be denominated in USD amounts. 

"The agreement will stimulate further development of direct trade in yuans and rubles on the domestic foreign exchange markets of Russia and China," the Russian press office said. 

Currently, over 75 percent of payments in Russia-China trade settlements are made in US dollars, according to Rossiyskaya Gazeta newspaper. This new development follows a trend among Russian companies "de-dollarizing" in favor of the yuan and other Asian currencies should the West freeze Russia's national assets. Oil giant Gazprom announced in June it wants to trade shares on the Singapore Stock Exchange, and VTB, Russia's second largest bank, says it will increase non-dollar agreements. 

Russia and China signed a 30-year, $400 billion dollar gas deal in May. That and the new currency swap is a further strengthening of an existing security framework between the two countries that also includes Kazakhstan, another oil and natural gas producer. Despite conflicting national interests between the two Asian powers, several political analysts speculate that a formal Asian alliance between Russia and China is in the offing.

Visiting Shanghai in May, Russian President Vladimir Putin acknowledged the increasing cooperation between Russian and Chinese banks, and stated the two nations were to increase financial cooperation. The Chinese yuan already trades directly with the euro, yen, the Australian dollar, the Brazilian real, and the New Zealand dollar and many other currencies.