With Donald Trump ascending to the presidency, his aggressive tariff policies have stirred concerns globally. Nations are now pivoting toward a multipolar economic framework, actively reducing dependence on the US dollar. A recent move by Indonesia and India underscores this shift, as both countries announce their decision to bypass the dollar in bilateral trade, opting instead for local currencies.
Over the weekend, Indonesian President Prabowo Subianto visited New Delhi to discuss trade and financial collaboration. Following the meeting, a joint statement from both governments revealed their plan to use the Indian Rupee and Indonesian Rupiah for transactions. The statement emphasized the swift implementation of the agreement and the belief that local currency usage would enhance trade and deepen financial integration between the two economies.
This agreement builds upon an earlier memorandum of understanding between the two nations promoting local currency use. By leveraging their own currencies, India and Indonesia aim to reduce reliance on the US dollar, aligning with the growing global trend of de-dollarization.
Indonesia, a prominent member of the ASEAN bloc, has consistently supported using local currencies in trade. With this latest development, the country is advancing similar discussions with other economic powerhouses, including China, Japan, Malaysia, and Thailand. Reports also suggest potential trade agreements with Russia, where local currencies would replace the dollar.
The growing momentum of de-dollarization could have significant implications for the US dollar’s dominance. As more nations seek alternatives, the dollar risks losing its global hegemony in trade and finance. Indonesia’s decision, coupled with other nations’ moves toward local currencies, signals a broader shift that may reshape the global economic landscape.
With Trump’s tariff policies adding pressure, the appeal of local currency trade agreements is only growing. As Indonesia continues discussions with leading nations, the de-dollarization trend appears poised to accelerate, challenging the USD’s long-standing supremacy in international trade.
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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