https://sputniknews.in/20231007/is-dedollarization-possible-4608883.html
Is Dedollarisation Possible?
Is Dedollarisation Possible?
Sputnik India
In recent months, de-dollarization has emerged as a major trend, with countries of the Global South leading the fight against the US dollar's dominance in international trade.
2023-10-07T20:22+0530
2023-10-07T20:22+0530
2023-10-08T12:22+0530
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With several countries realising that it would be better for their financial health to move away from the US dollar in the wake of Western economic sanctions against Russia, there has been a renewed push towards de-dollarisation.This situation arises as President Vladimir Putin's government grapples with a daunting landscape, specifically regarding the sale and delivery of their products in the global market. Numerous countries have been targeted with financial embargoes by Western nations, posing a significant challenge.China, as Russia's most powerful ally, has stepped in to support the Eurasian nation, establishing itself as its primary importer of crude oil.According to September data released by China's customs department, trade between the two neighbouring countries grew by an impressive 32 per cent in the January-August period. The total value of settlements rose to a staggering $155 billion, surpassing the performance of the first eight months of 2022.The trade volume reached $155 billion, which included exports of $71.8 billion from Beijing to Moscow, alongside imports of Russian goods valued at $83.3 billion by China.Russia-China De-DollarizationThe Russian Foreign Ministry has stated that the process of trade de-dollarisation between Russia and China is nearing its final stage.He stressed that the use of the ruble-yuan for trading purposes on the Moscow Exchange (MOEX) has been outstripping the dollar-rouble pair for months.Zinoviev emphasized that business groups in both countries have rejected the "toxic" currencies of the West, asserting that trading in rubles and yuan is significantly more secure compared to US dollars or euros.De-Dollarisation in BRICS CountriesIn addition to Russia and China, both members of the powerful BRICS grouping, other members of the bloc, namely India, Brazil and South Africa, have also taken the lead in initiating de-dollarisation with their strategic and trading partners.India has signed agreements with various countries such as the UAE, Bangladesh, Nepal, Bhutan, Iran, Malaysia, and Russia, allowing them to engage in bilateral trade using their respective local currencies.Meanwhile, Brazilian President Luiz Inacio Lula da Silva urged the BRICS countries to come together in favour of a common currency within the member states to reduce their dependence on the US dollar.Yet the governor of South Africa's central bank, Lesetja Kganyago, stated that ''There were no plans to introduce a BRICS currency, at least, not yet.''BRICS - Example of De-DollarisationHowever, a renowned US economist has supported the notion, expressing the belief that a BRICS currency could serve as a "viable alternative for the US dollar.""BRICS will accelerate the transition to a multi-currency system. The dollar will still play its role, but much less among the many currencies," he summed up.
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With several countries realising that it would be better for their financial health to move away from the US dollar in the wake of Western economic sanctions against Russia, there has been a renewed push towards de-dollarisation.
This situation arises as President Vladimir Putin's government grapples with a daunting landscape, specifically regarding the
sale and delivery of their products in the global market. Numerous countries have been targeted with financial embargoes by Western nations, posing a significant challenge.
China, as Russia's most powerful ally, has stepped in to support the Eurasian nation, establishing itself as its primary importer of crude oil.
According to September data released by China's customs department, trade between the two neighbouring countries grew by an impressive 32 per cent in the January-August period. The total value of settlements rose to a staggering $155 billion, surpassing the performance of the first eight months of 2022.
The trade volume reached $155 billion, which included exports of $71.8 billion from Beijing to Moscow, alongside imports of Russian goods valued at $83.3 billion by China.
Russia-China De-Dollarization
The Russian Foreign Ministry has stated that the process of trade de-dollarisation between Russia and China is nearing its final stage.
"The share of national currencies in Russian-Chinese payments is growing at an extremely rapid pace. At the beginning of 2022, it was hovering around 25%,
now it is exceeding 80%," Georgy Zinoviev, the director of the Asian Department in the Russian Foreign Ministry said last month.
He stressed that the use of the ruble-yuan for trading purposes on the Moscow Exchange (MOEX) has been outstripping the dollar-rouble pair for months.
Zinoviev emphasized that business groups in both countries have rejected the "toxic" currencies of the West, asserting that trading in rubles and yuan is significantly more secure compared to US dollars or euros.
De-Dollarisation in BRICS Countries
In addition to Russia and China, both members of the powerful BRICS grouping, other members of the bloc, namely India, Brazil and South Africa, have also taken the lead in initiating de-dollarisation with their strategic and trading partners.
India has signed agreements with various countries such as the UAE, Bangladesh, Nepal, Bhutan, Iran, Malaysia, and Russia, allowing them to engage in bilateral trade using their respective local currencies.
Meanwhile, Brazilian President Luiz Inacio Lula da Silva urged the BRICS countries to come together in favour of a common currency within the member states to reduce their dependence on the US dollar.
"The creation of a currency for trade and investment transactions between BRICS members increases our payment options and
reduces our vulnerabilities," he said during the group's summit in Johannesburg in August this year.
Yet the governor of South Africa's central bank, Lesetja Kganyago, stated that ''There were no plans to introduce a BRICS currency, at least, not yet.''
BRICS - Example of De-Dollarisation
However, a renowned US economist has supported the notion, expressing the belief that a BRICS currency could serve as a "viable alternative for the US dollar."
"BRICS could create a viable alternative to the US dollar. Therefore, the US dollar would indeed be overthrown as the predominant global currency", American financial expert Jeffrey Sachs told Sputnik.
"BRICS will accelerate the transition to a
multi-currency system. The dollar will still play its role, but much less among the many currencies," he summed up.
