“New Delhi, Beijing and Moscow are the nations that now institute a multipolar world that is endorsed by the majority of governments,” he said. He went on to note that China would also play a crucial role in the development of a common currency as it would add an additional 1.4 billion participants to the system. “New Delhi, Moscow should institute a new economic association with a new shared currency, which could be a digital ruble or the Indian rupee,” Babakov was quoted as saying. Sources have disclosed that Russia is behind the idea, as it has faced economic sanctions from the West over invasion of Ukraine.Īlexander Babakov highlighted the fact that Russia and India would both benefit from the creation of a common currency that could be used for payments, calling it the “most viable” route to take at this time. It is reported that the new financial agreement could be seen as soon as in August when the countries meet for their annual summit in South Africa. Taking this forward, the BRICS collective - made up of Brazil, Russia, India, China and South Africa - are also mulling creating a new currency to facilitate trade. Certainly, rupiah over time could become one of the variety of global reserve currencies in the world.” China has long been trying to push back against the hegemony of the US dollar. “It (Indian rupee) could be a unit of account, it could be a means of payment, it could become a store of value.
In an interview to ET Now, the economist nicknamed Doctor Doom had said, “One can see how the rupiah could become for some of the trade that India does with the rest of the world, especially South-South trade could become a vehicle currency.” In February, noted economist Nouriel Roubini had said that the Indian rupee over time could become one of the global reserve currencies in the world. Recently, 18 countries, including UK, Germany, Russia and even the United Arab Emirates, have been given permission to trade in Indian rupees. India too has been trying to move away from the dollar. He added that Brazil and China are now trading with each other in yuan, helping to establish the Chinese renminbi as an international currency and dollar challenger. “Countries willing to continue to trade with Russia, like India and China, have started doing so in rupees and yuan instead, triggering talk of the de-dollarisation of the international trading order.” To punish Russia for its invasion of Ukraine, western governments froze $300 billion of Russia’s foreign currency reserves last year, roughly half the total, and expelled Russian banks from the Swift international payments system.Īs Jason Hollands, managing director of investment platform Bestinvest, explains, “The so-called dollar “weaponisation” has rattled many countries and not just Russia.” “Strikingly, the decline in the dollar’s share has not been accompanied by an increase in the shares of the pound sterling, yen and euro, other long-standing reserve currencies… Rather, the shift out of dollars has been in two directions: a quarter into the Chinese renminbi, and three quarters into the currencies of smaller countries that have played a more limited role as reserve currencies.”Īlso read: Petrodollar vs Petroyuan: Can China overthrow US in the global oil market? “The dollar’s share of global foreign-exchange reserves fell below 59 per cent in the final quarter of last year, extending a two-decade decline, according to the IMF’s Currency Composition of Official Foreign Exchange Reserves data,” the paper stated. In 2022, the International Monetary Fund noted that central banks today are not holding the greenback as reserves in the same quantities as yesteryear. This move has been gaining speed in the last few years, especially in the previous year. Moreover, countries can reduce their exposure to currency fluctuations and interest rate changes, which can help to improve economic stability and reduce the risk of financial crises. The proponents of de-dollarisation say that this process would reduce other countries’ dependence on the US dollar and the US economy, which could help mitigate the impact of economic and political changes in the US on their own economies. It is a process of substituting the US dollar as the currency used for trading oil and/or other commodities.
This process is called de-dollarisation - and it refers to reducing the dollar’s dominance in global markets. However, not everybody likes playing by US rules and countries like Russia and China would like to call a halt to dollar hegemony.
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