BRICS Builds Momentum As India And Russia Look To Ditch The Dollar

India and Russia are doing their best to no longer rely on the US dollar in their trade relations going forward. They are leveraging their national payment systems, RuPay and MIR, to facilitate smoother cross-border transactions. Prime Minister Narendra Modi of India met with Russian officials in Moscow to discuss integrating RuPay and MIR for trade purposes.

Supporting Local Currencies

India is willing to utilize the aforementioned systems for transactions with Russia, signaling a big move towards de-dollarization. This decision is expected to yield financial benefits by using local currencies and avoiding exchange rate costs.

Andrey Kostin, CEO of the VTB Bank in Russia, emphasized the necessity of developing a settlement system that includes the global south, enabling transactions in national currencies rather than the US dollar. Despite maintaining friendly ties with the United States, India is gradually aligning more closely with Russia and other BRICS nations.

Dollar Still Going Strong

India expressed interest in enhancing cooperation with G20 nations, indicating broader strategic realignments. While these moves by BRICS countries suggest a trend towards diversification and de-dollarization, it is worth mentioning that the US currency remains dominant globally. A recent study highlighted that the dollar continues to lead in foreign reserve holdings, trade invoicing, and currency transactions worldwide, maintaining its role as the primary global reserve currency for the foreseeable future.

Furthermore, India has generally taken a cautious stance on cryptocurrencies, expressing concerns about potential risks and volatility while exploring the possibility of a central bank digital currency (CBDC). Russia, on the other hand, has shown a more open attitude, moving towards regulating and legalizing cryptocurrencies while also considering its own digital currency initiatives.