The Dominance of the US Dollar in India’s Trade Strategy Amidst BRICS Dynamics

In an interesting development in international trade dynamics, India has recently made a significant decision regarding its trade policies within the BRICS framework. According to a post by World Affairs journalist Nazia Khan on X, India has rejected a proposal by BRICS (Brazil, Russia, India, China, and South Africa) to conduct trade in local currencies, opting instead to continue trading in US dollars. This move highlights the complexities within BRICS and underscores the enduring influence of the US dollar in global trade, particularly in India’s economic strategy.

The Decision

India’s stance was captured in a post by @naziakhan455 on January 5, 2025, at 14:49 UTC, which included an image of a prominent Indian leader at a podium, symbolizing the official stance of the government. The post stated, “India rejects BRICS offer to trade in local currency. It wants to trade in US dollar.” This decision comes at a time when the Indian Rupee has hit an all-time low against the dollar, raising concerns about the country’s economic stability and its reliance on the US currency.

Implications for BRICS

The refusal to de-dollarize trade within BRICS isn’t isolated to India. As noted by Parth Vaghela in a reply to Khan’s post, “In BRICS, not alone India but Brazil and South Africa also want US support for their economical growth.” This suggests a broader trend where member countries, despite their collective stance against Western financial dominance, still see the US dollar as a critical component for economic stability and growth. Vaghela pointed out that currently, 89% of international trade is conducted in dollars, indicating a gradual process for any shift towards de-dollarization.

Economic Context

India’s decision can be contextualized within the broader economic landscape. On the same day, the Indian Rupee reached a record low against the dollar, influenced by a strong dollar and other economic factors, signaling potential vulnerabilities in India’s economy if it were to move away from the dollar in international trade. The Reserve Bank of India (RBI) has been actively intervening to manage the currency’s fall, underscoring the importance of maintaining dollar stability for India’s economic health.

Public Reaction

The reactions on X to India’s decision were varied. While some users like Arshi Malik (@arshlamalik9971) acknowledged the strength of the dollar with a simple, “US Dollar Still Stronger…,” others expressed more critical views. For instance, @eastisbest_ made a derogatory comment, and @duty00444 called India an “ass licker,” reflecting dissatisfaction with India’s alignment with US economic policies over BRICS solidarity. There was also a sentiment of betrayal from @sayed_logan, who remarked, “Betraying your partner is not an honorable thing.”

Looking Forward

The decision to continue trading in US dollars rather than moving towards local currency trade within BRICS poses questions about the future of economic cooperation among these nations. It indicates a cautious approach by India towards altering established economic practices, especially in a period where economic stability is paramount. The trend towards de-dollarization, as discussed in various forums, seems to be a slow-moving process, with India preferring to maintain its current strategy for now.

Conclusion

India’s choice to prioritize the US dollar over local currency trading within BRICS is a strategic economic decision reflecting both national interests and global economic realities. While this might seem to undermine the spirit of BRICS cooperation, it also highlights the complexities of transitioning away from a dominant global currency. As the economic landscape evolves, it will be interesting to see how this decision impacts India’s position within BRICS and its broader international trade relations.