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De-Dollarisation Plans Gain Momentum as BRICS Countries Replace Dollar with New Global Currency

Strategic Insights

— 2 min read

Growing global fragmentation and geopolitics shifts have fueled de-dollarisation plans, with BRICS countries leading the charge by replacing the dollar with a new global currency. Amidst the crisis, India has seen significant growth in rupee-rouble trade, with Russia becoming its largest crude supplier, and most transactions taking place in rupees. The commerce secretary, Sunil Barthwal, announced the opening of 53 vostro accounts for rupee-rouble trade, indicating substantial progress. This shift towards de-dollarisation and bilateral trades in local currency may strengthen the Indian rupee, making it more widely accepted as a medium of exchange worldwide. The value of a currency's usage in settling global trade is a significant indicator of its strength.

Key Takeaways:

  • The Indian government has established an arrangement in 2022 to promote global trade with a focus on exports from India and to increase interest in the rupee.
  • A total of 53 vostro accounts have been opened for rupee-rouble trade, indicating significant progress in this direction.
  • The commerce secretary, Sunil Barthwal, mentioned that trade inquiries are being made, and there is good progress in terms of vostro account openings.
  • The de-dollarisation plans are gathering momentum, with BRICS countries replacing the dollar with a new global currency.
  • The US dollar's share in global foreign exchange reserves has been shrinking since the start of the 21st century, falling to 59% as of December 2021.
  • The depreciation of the rupee from Rs 4 during Independence to Rs 84 against the US dollar now has significant implications for the Indian economy.
  • Devaluing the currency aids in boosting exports, which can be beneficial for the economy.
  • The widening trade deficit is a contributing factor to the weakening of the rupee, making imported goods costlier and leading to inflation.
  • As of now, banking systems from 22 countries, including Belarus, Botswana, Fiji, and others, have opened Rupee vostro accounts in Indian banks.

Statistics:

  • 53 vostro accounts have been opened for rupee-rouble trade.
  • The US dollar's share in global foreign exchange reserves has fallen to 59% as of December 2021.
  • The rupee has depreciated by Rs 80 in the past 77 years, from Rs 4 against the Pound sterling to Rs 84 against the US dollar.
  • The government has informed that banks from 22 countries had opened special Rupee vostro accounts in Indian banks to promote local currency trade as part of de-dollarisation plans.
  • 59% is the current share of the US dollar in global foreign exchange reserves.

Sources:

  • (ANI) - August 15 (ANI): With growing global fragmentation, and geopolitical and geostrategic shifts, de-dollarisation plans are gathering currency.
  • (ANI) - India's Commerce Secretary, Sunil Barthwal, said on Wednesday that Rupee-rouble trade has significantly increased.
  • The article mentions the meeting of Ministers of Foreign Affairs of the BRICS countries in Russia's Nizhny Novgorod, where they called for enhanced use of local currencies in bilateral and multi-lateral trades and financial transactions between member countries.
  • (ANI) - The article quotes The Express Tribune, stating that the of India in 2022 put in place an arrangement, allowing transactions in domestic currencies to promote the growth of global trade with an emphasis on exports from India and to bring in increasing interest towards the rupee.

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