In a significant move towards reshaping global finance, Russian President Vladimir Putin’s recent visit to India underscored a deepening alliance between India, Russia, and China. This strategic partnership, rooted in BRICS, aims to reduce the international reliance on the US dollar. The discussions are pivotal, focusing on strengthening bilateral trade through local currencies and exploring the concept of a unified BRICS currency, a proposal championed by China.
The momentum for this financial shift was palpable at the November 2024 BRICS Summit in Kazan, Russia. President Putin unveiled a prototype of a potential shared currency, emphasizing that the objective is not to eliminate the dollar but to establish robust alternative financial systems for member nations and their global partners. “We are not denying the dollar, nor fighting it. But if it does not allow us to operate freely, we must explore other options,” he stated.
This push for a common alternative currency is driven by a desire for enhanced economic independence and a challenge to the dollar’s overwhelming global dominance, which accounts for nearly 89% of international currency trades and historically dominated oil transactions. While a fifth of oil trade occurred in non-dollar currencies in 2023, the BRICS nations seek to accelerate this trend.
De-dollarisation, the process of reducing dependence on the US dollar, involves promoting trade in local currencies, thereby decreasing global dollar demand. This strategy bolsters financial autonomy for countries like India, Russia, and China and mitigates the impact of volatile US policies. With India set to host the next BRICS summit, this alliance against dollar dominance is poised for further solidification.