BRICS: India takes all to the wrong leg and refuses to let go of the dollar

The question of dedollarization agitates the main economic power. While BRICS is looking for alternatives to the US dollar for their international stock exchanges, India embarks on a different way. Minister of Foreign Affairs Subrahmanyam Jaishankar explained the attitude of the country during the UK visit: “India does not plan to replace the dollar as a reference currency”. A statement that contrasts with the global trend and which causes questions about the strategic motivation of the new Delhi.

Support confirmed to the dollar in spite of the tendency to diversify

During his recent intervention, Subrahmanyam Jaishankar wanted to dispel any ambiguity in the position of India against the dollar: “There is no policy on our part to replace the dollar. At the end of the day, the dollar as a reserve currency is a source of international economic stability”.

This is a clear position at a time when several major economies seek to reduce their dependence on American currency.

Despite his membership in Brics India, he does not follow the last line of some of his partners on the monetary question.

Unlike the perception of the unified queue within the organization, the Minister said: “There is no unified BRIC position against the dollar”. Each country thus monitors pure interests, and the new Delhi prefers an approach that promotes financial stability and foreign investment rather than economic confrontation with the United States.

Maintaining the dollar as a reference currency is explained by several reasons:

• International financial stability: the dollar remains the main reserve currency and its maintenance avoids economic shocks;
• Trade streams and major investments in dollars: a large part of Indian foreign trade is denominated in the dollar, which makes any substitution risky;
• The weight of strategic relations with the United States: by strengthening its economic ties with Washington India, it provides business agreements and international financing;
• The distrust of alternative BRICS is still uncertain: unlike certain expectations of the BRIC, the coordinated position for dedollarization has not admitted, which retreats to individual strategies.

India, therefore, is far from a sudden break with the dollar and seeks to maintain its economic interests and continue diversifying its money instruments.

Dual Strategy: Internationalize Rupees without dollar doubt

If India does not question the dollar hegemony, it makes efforts to internationalize its own currency. Jaishankar emphasized this ambition:

We clearly promote the internationalization of roupie because we actively globalize India.

This will include the development of commercial agreements that allow rupees regulations, especially countries with difficulty in accessing strong currencies.

Such dynamics are reflected in the implementation of direct payment mechanisms in rupees with several economic partners. The aim is to double: reduce the dependence on the dollar fluctuations and strengthen the country’s monetary sovereignty.

However, this approach remains complementary and is not against the use of the dollar on international stock exchanges.

In parallel India remains pragmatic in the face of world money voltage. US threats for economic sanctions against countries dealing with the policy of dedollarization have led certain states to a more reasonable posture.

For example, Donald Trump has already mentioned the customs prices of up to 150 % of nations trying to withdraw from the dollar. Rather than confrontation, India accepts a strategic approach to maintain its economic interests and consolidate its ties with Washington.

This choice of a hybrid strategy reflects the desire to adapt to developments in the global financial system. By consolidating the location of De la Roupie on the international scene and maintaining the dollar to turn his monetary policy, India seeks to stand up as a central actor in the multipolar world. This pragmatism allows him to avoid economic turbulence associated with too steep turn to prepare his economy for future transformations. India is not satisfied with this posture of the body with the instructions of the dictated BRICS or the United States. It forms its own economic and monetary trajectory.

Luc Jose A.

A graduate of the Toulouse and the Blockchain Consultant Certification certification holder and I joined the adventure of Cointribuna in 2019. I convinced of the potential of blockchain to transform many economy sectors, committing to raising awareness and informing the general public about how the ecosysty developed. My goal is to allow everyone to better understand blockchain and take the opportunity they offer. I try to provide an objective analysis of messages every day, decrypt trends on the market, hand over the latest technological innovations and introduce the economic and social issues of this revolution.

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