President Vladimir Putin’s recent visit to India has highlighted a growing de-dollarisation trend driven by key BRICS nations: India, Russia, and China. This strategic collaboration focuses on promoting trade settlement in local currencies to decrease reliance on the US dollar. The discussions during Putin’s trip are expected to foster deeper economic and financial cooperation, including the potential development of a common BRICS currency, an initiative actively supported by China.
The collective aspiration for alternative financial systems was evident at the November 2024 BRICS Summit in Kazan, where President Putin presented a draft of a potential shared currency. He stressed that the objective is to build alternative transaction mechanisms for member states and their partners, not to oust the dollar entirely. “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 financial diversification comes as the global economy grapples with the dollar’s pervasive influence. Although the dollar underpins roughly 89% of international currency trades and historically dominated oil sales, the share of non-dollar transactions in oil trade rose to about 20% in 2023.
De-dollarisation is a multifaceted process involving the reduction of dependence on the US dollar through local currency trade. This approach enhances financial autonomy for nations like India, Russia, and China, making them less susceptible to external economic pressures and policy changes. With India scheduled to host the next BRICS summit, the alliance’s efforts to create a more multipolar financial system are expected to gain further momentum.