Are India And BRICS Trying To Replace Dollar As Global Reserve Currency?
Although India has taken steps to reduce its reliance on the US dollar, country’s External Affairs Minister S Jaishankar had earlier clarified that India has “no interest” in weakening the US dollar. In December 2024, then Reserve Bank of India (RBI) Governor Shaktikanta Das had clearly stated that India was not pursuing “de-dollarisation”.
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Since assuming office earlier this month, US President Donald Trump has repeatedly warned BRICS nations of 100 per cent tariffs if they attempt to replace US dollar as the global reserve currency with an alternative currency.
Earlier today, Trump said that the US requires a commitment from the BRICS nations that they will “neither create a new currency, nor back any other currency to replace the mighty US dollar.” “There is no chance that BRICS will replace the US Dollar in International Trade, or anywhere else, and any Country that tries should say hello to Tariffs, and goodbye to America!” the US President posted on Truth Social. What Is BRICS?
BRICS, formed in 2009, is the only major international group of which the United States is not a part. BRICS consists of ten countries- Brazil, Russia, India, China, South Africa, Egypt, Ethiopia, Indonesia, Iran and the United Arab Emirates.
BRICS was established on the premise that already-existing international organisations were overly dominated by western powers and fail to serve the agenda of developing nations. The BRICS group has become a major political force in the last two decades, with member nations hoping to increase their sway in the global order.
Are BRICS Nations Trying To Replace US Dollar
Countries around the world, including the members of the BRICS group, have been trying to reduce dependence of the US dollar as the global reserve currency as well as from the US-led global financial system since the Russia-Ukraine war began.
The renewed sense of urgency among the nations was a result of US throwing Russia out of its SWIFT system, which is the key to international financial systems. However, there is no concerete plan for an alternative currency as of yet.
According to EurAsia Daily, at the Kazan summit in October 2024, Russia President Vladimir Putin was presented with a symbolic ‘BRICS bill’. However, the head of the country’s Central Bank, Elvira Nabiullina, did not like the idea. Earlier in 2023, Brazilian President Luiz Inacio Lula da Silva had advocated for an alternative
India’s Stance On De-Dollarisation & BRICS Currency
Although India has taken steps to reduce its reliance on the US dollar, country’s External Affairs Minister S Jaishankar had earlier clarified that India has “no interest” in weakening the US dollar. In December 2024, then Reserve Bank of India (RBI) Governor Shaktikanta Das had clearly stated that India was not pursuing de-dollarisation.
“There a personal relation between PM Modi and Trump…Where the BRICS remarks was concerened. We’ve always said that India has never been for de-dollarisation, right now there is no proposal to have a BRICS currency. The BRICS do discuss financial transrations…US is our largest trade partner, we have no interest in weakening the dollar at all,” Dr Jaishankar said.
At the Carnegie Endowment for International Peace in Washington in October, EAM Jaishankar had clarified that moving away from the US Dollar is not part of New Delhi’s economic policy. “We have never actively targeted the dollar. That’s not part of either our economic policy or our political or strategic policy,” said Dr Jaishankar.
In the past two years, New Delhi has traded in Indian rupee at several instances. Notably, the Reserve Bank of India (RBI) allowed invoicing and payments for international trade in Indian rupees in 2022, after sanctions were imposed on Russia amid the war in Ukraine. On this, Dr Jaishankar said that India had to look for “workarounds” when trade in dollars with some partners became difficult. Former RBI Governor said that entering local currency trade agreements were intended to only “de-risk” Indian trade.
A report by Voice of America suggests that India is not pursuing the creation of a shared BRICS currency, however, it is making efforts to promote trade in its local currency. Ajai Sahai, director general of the Federation of Indian Export Organizations, though, said New Delhi does not plan to move away from the American currency, as quoted by the VOA report. Several thinkers have cited the lack of common market of the BRICS nation as the main reason why no such currency should be expected anytime soon.
