 "No de-dollarisation strategy in place: RBI Guv on Trump's warning to Brics")
Reserve Bank of India (RBI) Governor Shaktikanta Das clarified that India has not taken any concrete steps towards de-dollarisation and the primary focus has been on de-risking domestic trade from potential geo-political disruptions.
Briefing the media after the RBI's Monetary Policy Committee (MPC) meeting on Friday, Das was asked about US President-elect Donald Trump's recent remark threatening to impose heavy tariffs on Brics nations, including India, if they push for an alternate currency challenging dollar. The RBI Governor said that while there have been discussions within Brics about the possibility of a shared currency, no decision has been made yet.
The challenge, Das noted, is that Brics nations are spread across different regions, unlike the Eurozone, making geographic continuity an important factor.
At the last Brics Summit in Kazan, Russian President Vladimir Putin also indicated that such an idea is a long-term vision and not currently under active consideration.
India’s trade strategy
Das noted that while India may not have moved towards de-dollarisation, it has taken steps to promote local currencies for cross-country trade. This includes permitting the opening of VOSTRO accounts and forming agreements with two countries for local-currency trade, he said.
"This is aimed at de-risking Indian trade as reliance on a single currency can be risky due to its value fluctuations," Das explained.
Trump's warning to Brics nations
Trump, who is set to assume the role of US President on January 20, 2025, has threatened to impose 100 per cent tariffs on Brics nations and their allies if they introduce or support a currency that could challenge the US dollar.
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In a post on Truth Social on November 30, Trump said, "We demand a commitment from these countries that they will neither create a new Brics currency nor support any alternative currency to replace the mighty US Dollar, or they will face 100 per cent tariffs."
Notably, Brics is the only big multi-nation bloc in the world which does not include the US.
Brics, originally consisting of Brazil, Russia, India, China, and South Africa, expanded to 10 members on January 1, 2024, with the inclusion of Egypt, Ethiopia, Iran, Saudi Arabia, and the UAE. The bloc has been exploring local currency use to mitigate trade disruptions, especially in response to sanctions and the US dollar reserve shortages faced by some countries.
India, following the RBI’s announcement in July 2022 to facilitate global trade in rupee, began practical implementation with Russia after the 2022 Ukraine invasion and related sanctions.