In a new turn of events, India, a member of the BRICS bloc, announced that it will not abandon the US dollar, expressing its disagreement with the de-dollarization agenda that has enveloped the global financial landscape in recent months.
According to the most recent statements from India’s foreign minister, Subrahmanyam Jaishankar, the country is not interested in dedollarizationand therefore they will continue to use the US dollar “wherever it is accepted as a form of payment.”
Jaishankar noted that although the policies pursued by the US government often complicate trade with certain countries, India is looking for “alternative solutions” while continuing to use the dollar, which is what other nations seek. It ensures, therefore, that de-dollarization It is not part of their economic policy.
We have never actively attacked the dollar. Others may have done it. What I will say is that we have a natural concern. We often have business partners who lack dollars for transactions. Therefore, we must decide whether to give up dealings with them or find alternative arrangements that work. But there is no malicious intent towards the dollar.
S. Jaishankar, Foreign Minister of India.
The minister explained that what sometimes happens is that if the trading partner with whom they negotiate does not have dollars, they accept close the deal in local currencies. He referred in particular to some of India’s closest trading partners, such as Bangladesh, Sri Lanka and Nepal, which are experiencing severe dollar shortages that limit their ability to import goods.
With these words, India makes it clear that has no plans to end dependence on the US dollar, and that it will continue to use this currency for commerce and transactions where it is a necessary form of payment.
It is a position that can have significant repercussions for the implementation of the BRICS plans, taking into account the weight it has in the global economic dynamics, being the fifth economy on the planet which represents 3.6% of world GDP. India is the second country with the highest percentage of GDP in the BRICSafter China.
According to a report from the Center for Economics and Business Research (CEBR), India is expected to maintain strong growth of around 6.5% between 2024 and 2028, and becomes the third largest economy in the world by 2032, surpassing Japan and Germany.
Tensions with China keep India away from the BRICS plan
The Indian minister’s comments ratify the position taken by the country during the Shanghai Cooperation Organization (SCO) summit held last July, where China and Russia expressed their intention to give greater strength to de-dollarization. encouraging the use of local currencies, in particular the yuan. India opposed this initiative.
Among the reasons that explain the attitude of the Indian government are the geopolitical tensions present in relations with China. This, within the framework of a border dispute that confronts the two countries in the Himalayan region. In the midst of the conflict, India has repeatedly expressed his distrust of China’s economic intentions, and therefore is reluctant to use the yuan. A skepticism that remains even when both countries have been making efforts to stabilize their commercial relations.
In that sense, the country prefers to keep the dollar for its future transactions. In fact, faced with the demands made by Russia (amid sanctions) to pay for oil purchases in yuan, India chose to reduce its imports of Russian oil and turn to the United States, paying in dollars. An action that reinforces the idea that its foreign policy is not characterized by being anti-American.
In this way, with the refusal to adopt the yuan for commercial exchanges, India sends a clear message about its commitment to maintain the US dollar as the dominant currency.
As political analyst Niranjan Marjani explains, India is the only member of the BRICS that enjoys close and cordial ties with Western countries, particularly with the United States. “Its multilateralism consists of recognizing the economic and strategic interests of all countries in the world, and the firm opposition of China and Russia to the West does not fit well with this vision,” says the expert.
New Delhi has pursued a policy of balanced relations with both the West and Russia. China is the only partner in the BRICS that makes their maneuvers difficult. That is why the government promotes bilateral trade in local currencies, but not dedollarization.
Niranjan Marjani.
Based on the above, the Indian analyst sees it as unlikely that his country will move forward with an agreement that promotes complete de-dollarization. «The other members of the BRICS have, more or less, a clear agenda of opposition to the United States with varying degrees.
An attitude that could have significant repercussions on global economic dynamics, especially when there is only one week left before the BRICS summit takes place in Russia, an event where dedollarization will be an important topic of discussion. The launch is expected of a new system for international payments, which aims to put aside dollars and strengthen the path to dethroning the US currency.
Given this new scenario, most analysts conclude that the long-term implications of this divergence of strategies within the BRICS are still uncertain. If other member countries decided to follow India’s example, the dollar’s dominance could be consolidated, at least temporarily. On the other hand, if China and Russia manage to convince more nations to follow their example, dedollarization so desired will have the possibility of materializing.
