The de-dollarization of settlements with China and India reaches 90-95 percent in Russia, and the global trade is reconfigured without the US dollar’s prominence.
Russia is almost completely de-dollarizing its trade settlements with China and India, and 90-95 percent of operations in these countries are being carried out in national currencies.
This milestone was confirmed by Russian Deputy Prime Minister Alexander Novak on October 20, which showed an extensive decrease in dependence on the US dollar in major Asian trade routes.
The change indicates a mechanical market adjustment to the Western sanctions restricting dollar-based settlement facilities.
The change has not interfered with trade patterns. Rather, it facilitates Russia, China, and India to export sustained energy and commodities.
The transition to national currencies was a natural progression when the dollar had lost its hegemonic position in such transactions due to geopolitical pressure.
De-Dollarization’s Deep Impact on Global Trade
The transfer of the dollar in the Russian transactions with the largest economies in Asia is an indication of a larger, multipolar re-orientation of world finance.
BRICS countries (Brazil, Russia, India, China, South Africa), ASEAN, and the Shanghai Cooperation Organization (SCO) are working harder to reduce their exposure to the US sanctions and dollar causes of inflation.
These countries are seeking to regain economic sovereignty by making their currencies more reliant on settlements with local currency or other systems of money.
The action of Russia highlights how the restrictions on dollar access have increased the pace of these alterations, which have strengthened bilateral economic relations with China and India.
Novak emphasized that this shift was not predestined by the state policy but appeared naturally as a result of market circumstances.
This natural development is opposed to past decades, where the US dollar was in a position of supremacy in terms of settlements in international trade.
Ripple Effects Across BRICS and Beyond
The BRICS nations have today a large portion of foreign exchange reserves globally and fuel trade, which are necessary in the de-dollarization agenda.
In spite of the stalling of the endeavors of a single BRICS currency, the bloc aims at diminishing the dollar dependence, escalating the level of trade settlements using member currencies.
According to the recent statistics, the share of the ruble in the settlements in the foreign trade of Russia increased significantly, and its decline in the use of the dollar was offset.
Chinese and Indian national currencies are rapidly taking over a bigger role as a payment system linking the two economies, as the two economies continue to become more interdependent outside the dollar zone.
Last year, Russia traded with China to a record of 227 billion and India to 45 billion. This is a significant step towards economic independence and financial strength against the West due to the high volume of trade settlement in local currencies.
