As the Ukraine-Russia war rages, Moscow has found itself reeling under an onslaught of sanctions and limitations. In light of this, President Vladimir Putin unveiled a new foreign strategy last week, designating China and India as its primary allies on the international scene. With the creation of a new currency, relations between the three countries (and a few others) now seem ready to advance.
According to reports, the BRICS (Brazil, Russia, India, China, and South Africa) nations are looking into developing a single currency for intra-BRICS commerce. At the upcoming BRICS meeting in South Africa in August 2024, a new financial arrangement that has the potential to lead to a single BRICS currency may be unveiled.
The BRICS countries are developing a new payment medium based on a policy that “does not defend the dollar or euro,” according to reports citing Russian senator Alexander Babakov. According to reports, he said the new currency would be backed by rare-earth elements, gold, and other commodities. The assertion was made just days before South Africa dispatched senior officials to Russia to discuss the “recalibration of the global order” with President Vladimir Putin’s party. However, other officials from the member countries have yet to confirm it. Additionally, the nation will host a BRICS conference in August of this year.
President Putin changed his foreign strategy earlier on Friday, prioritising China and India. The declaration was made only a few days after Chinese Prime Xi Jinping visited Moscow to strengthen the “no limits” alliance that had been proclaimed the previous year. According to the statement, Russia would continue to develop a particularly privileged strategic partnership with the Republic of India with the aim of enhancing and expanding cooperation in all areas on a mutually beneficial basis, with a focus on boosting bilateral trade volumes, bolstering investment and technological ties, and ensuring the two countries’ resistance to the divisive actions of hostile states and their alliances. Additionally, it stated that it wanted to prioritise and strengthen its ability to play a global role in organisations like BRICS in order to “assist in adapting the global order to the realities of a multipolar world.”
India has also consistently worked to usurp the dollar as the world’s reserve currency. India’s rupee is being offered by New Delhi to nations who are running low on dollars. The nation wants to “disaster-proof” its own nation as well as the nations with which it conducts the bulk of its trade.
As developing nations like China and India step up to trade in their own currencies, the dominance of the US dollar in world trade is facing a serious challenge. Additionally, nations that the West views as neutral or aligned in relation to the ongoing Russian offensive in Ukraine are increasingly coming together to concentrate on shared global finance.
This is due to the US dollar’s almost hegemonic position as the dominant currency in finance. The status of the US dollar in international oil trading serves as the best example of this. Even if neither the parties trading the crude (in terms of their countries of origin) nor the barrels themselves have anything to do with it, the majority of commerce is expressed in US dollars. Due to the dominance of the dollar in international trade, the amount of debt held in other currencies fluctuates with the exchange rate. This causes the economy of the nations to become unstable, with US monetary policy frequently having a more significant impact than its own domestic policies.
