The BRICS economic bloc (Brazil, Russia, India, China, and South Africa) is experiencing a surge in trade with Russia, potentially marking a significant shift in the global financial landscape. This comes as the US dollar faces challenges and BRICS nations increasingly embrace local currency settlements.
Record-Breaking Trade On The Horizon
According to Anton Alikhanov, head of Russia’s Ministry of Industry and Trade, trade between Russia and BRICS countries is poised to reach record highs in 2024. This follows on the heels of a banner year in 2023, where BRICS trade with Russia jumped a staggering 28%, pushing the total value close to $300 billion. Notably, this upswing coincides with the US dollar’s recent struggles following the August 5th stock market crash.
Moving Away from the Dollar
For the past year, BRICS nations have actively pursued de-dollarization efforts through local currency settlements. This initiative, initially met with skepticism, appears to be paying off for Russia, a nation heavily impacted by Western sanctions. With bilateral trade with BRICS partners already exceeding last year’s pace by 6.4% in the first five months, the trend suggests a potential long-term shift away from US dollar dominance.
Alikhanov, speaking to Russian state media, acknowledged the positive trend and attributed it to a “powerful reorientation” of commodity flows. He emphasized the continued growth potential within BRICS trade, particularly with the continued use of local currencies.
India and Russia Lead the Charge
Recent developments further solidify the de-dollarization push within BRICS. Reports from Reuters indicate renewed discussions between the Reserve Bank of India and the Central Bank of Russia aimed at establishing a mechanism for increased rupee-rouble trade. This initiative would further lessen reliance on the US dollar, which is particularly important for Russia as it navigates the effects of sanctions.
Economic Development Minister Maxim Reshetnikov confirmed the discussions, highlighting the ongoing efforts to not only streamline trade between India and Russia but also to reduce non-tariff measures that could hinder economic exchange.
The burgeoning trade relationship between Russia and the BRICS bloc offers a glimpse into a potentially multipolar global financial system. The success of de-dollarization efforts within BRICS could pave the way for other countries to explore similar arrangements, potentially weakening the US dollar’s dominance as the world’s reserve currency.
However, some caution is warranted. While the trend is promising, establishing a robust system for international trade settlements outside the dollar will require overcoming significant logistical and regulatory hurdles. The coming months will be crucial in determining the long-term viability of this initiative.
Disclaimer: The information in this article is for general purposes only and does not constitute financial advice. The author’s views are personal and may not reflect the views of Chain Affairs. Before making any investment decisions, you should always conduct your own research. Chain Affairs is not responsible for any financial losses.
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