New Delhi: The Chief Economic Adviser (CEA) of India, V. Anantha Nageswaran, clarified on Wednesday that India is not pursuing any proposal to replace the US dollar as the dominant currency for international trade. Responding to questions regarding India’s stance on alternative global currencies, Nageswaran stated, “No, certainly not. I think India is not part of any such initiative.“
BRICS Summit and Local Currency Settlements
This statement comes amid discussions at last year’s BRICS Summit in Kazan, Russia, where member countries, including India, explored settling cross-border payments in local currencies and considered the creation of a special BRICS currency. The 16th BRICS Summit declaration highlighted the benefits of “faster, low cost, more efficient, transparent, safe, and inclusive cross-border payment instruments” and welcomed the use of local currencies for financial transactions within BRICS nations and their trading partners.
BRICS: Emerging Economies Collaborating
BRICS comprises emerging economies such as Brazil, Russia, India, China, South Africa, Egypt, Ethiopia, Iran, and the United Arab Emirates. The coalition seeks to amplify the voice of emerging markets in multilateral economic forums and foster cooperation on global economic issues.
Viability of Alternatives to the US Dollar
Despite regional initiatives, Nageswaran emphasized that “there is not a very viable alternative to the US dollar at this point,” adding that the emergence of such an alternative may take much longer. He pointed out that central banks worldwide are diversifying their foreign exchange reserves to reduce risks, with the Reserve Bank of India (RBI) increasing its gold holdings and other assets.
India’s Cautious and Pragmatic Approach
India’s stance reflects a pragmatic approach amid the global “de-dollarisation” debate. While some countries seek to reduce reliance on the US dollar due to geopolitical tensions, India prioritizes stability and continuity in trade and finance. Local currency settlements are viewed as risk mitigation strategies rather than attempts to replace the dollar.
Stability and Diversification
India remains committed to a balanced foreign exchange reserve strategy while engaging actively in multilateral forums such as BRICS to enhance cooperation among emerging economies. The country aims to maintain economic stability amid evolving global financial dynamics.
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