Russia and India, both part of Brics, are taking a big step in the worldwide trend of dedollarization. Almost 90% of their direct transactions are now in their national currency, which greatly reduces dependence on the US dollar. What consequences does this have for international financial markets and geopolitical power relations?
Russia and India, both part of Brics, are taking a big step in the worldwide trend of dedollarization. Almost 90% of their direct transactions are now in their national currency, which greatly reduces dependence on the US dollar. What consequences does this have for international financial markets and geopolitical power relations?
Dedollarization in full swing
The Russian ambassador in India, Denis Alipov, confirmed in an interview With the Tass news agency that financial cooperation between the two countries has grown considerably. “The mutual payments in national currency are stable. At present, around 90% of the direct payments between Russia and India are made in national currency, “Alipov said.
An important aspect of this collaboration is the mutual recognition of payment networks. Russia and India are currently discussing the integration of the Russian MIR payment system with the Indian Rupay network. If this plan continues, it would considerably facilitate transactions between the two economies.
The trade relations between Russia and India continue to strengthen themselves. According to Indian statistics, bilateral trade rose in the first eleven months of 2024 by 8.6% to $ 64.5 billion. Russian exports to India reached $ 60 billion, an increase of 7.7%, while Indian exports to Russia grew by 23.3% to $ 4.5 billion. This confirms the position of Russia as one of India’s largest trading partners and the second largest supplier after China.
What does this mean for world trade?
The use of national currency in the trade between Russia and India fits within a broader global movement in which countries are detached from the dominance of the US dollar. This process is accelerated by geopolitical tensions and economic sanctions against Russia, which encouraged Moscow to set up alternative financial structures.
There was even speculation about possible plans from Brics to create their own currencies in order to completely separate from the dollar and existing financial systems. However, it recently became clear that these plans have no priority. Not all BRICS federal states are equally positive about their own currency. For the time being, Brics wants to focus primarily on strengthening trade relationships.