New Delhi/Maputo: Giving India’s first reaction on the matter, External Affairs Minister S Jaishankar on Thursday said that “individual countries have their own position” on the issue of the BRICS grouping looking at trading in their own currency, amid the growing talk around de-dollarization of global trade.
After his talks with Mozambican National Assembly Speaker Esperança Bias, EAM Jaishankar while making a press statement was asked by a journalist if the BRICS grouping of Brazil, Russia, India, China and South Africa, is looking at trading in own currencies:
EAM answered: “This trade settlement is something that different countries are discussing; it is not something we are discussing within the BRICS. Individual countries have their own position on the matter.”
Asked if he would be discussing the issue of trading with their respective currencies with the Mozambican leadership, EAM said diplomatically, with a smile:
“I will be discussing many matters of economic cooperation with the Mozambican government.”
EAM’s comment comes as Brazil President Luiz Inácio Lula da Silva today urged developing nations to find an alternative currency to the dollar, denouncing the central role of the greenback in global trade.
“Why can’t we do trade based on our own currencies?” he is quoted as saying. “Who was it that decided that the dollar was the currency after the disappearance of the gold standard?” the Brazilian President said.
Speaking at the New Development Bank of Shanghai, Lula called for BRICS nations to establish a common currency with which they could transact.
“Why can’t a bank like that of the BRICS have a currency to finance trade relations between Brazil and China, between Brazil and other countries? It’s difficult because we are unaccustomed [to the idea]. Everyone depends on just one currency,” he said.
On March 30, Russian State Duma Deputy Chairman Alexander Babakov said that BRICS will ditch the US dollar and float its own currency.
“The transition to settlements in national currencies is the first step. The next one is to provide the circulation of digital or any other form of a fundamentally new currency in the nearest future. I think that at the BRICS [leaders’ summit], the readiness to realize this project will be announced, such works are underway,” Babakov said.
At the India-Russia Business Forum held in New Delhi, Babakov emphasized that India and Russia “should institute a new economic association with a new, shared currency,” but noted that China could play a crucial role in developing a common currency for the three nations.
“New Delhi, Beijing, and Moscow are the nations that now institute a multipolar world that is endorsed by the majority of governments. Its composition should be based on inducting new monetary ties established on a strategy that does not defend the US dollar or euro, but rather forms a new currency competent of benefiting our shared objectives,” Babakov said.
The BRICS summit is due in South Africa in August this year.
The GDP of the BRICS nations combined is about 25 per cent of the global GDP.
Following its invasion of Ukraine, Russia has been swamped by heavy sanctions and has been expunged from the SWIFT banking system, and is therefore trading with nations, including India, with their respective currencies.
The recent hike in US dollar interest rates has also left many emerging economies with external debt struggling.
The joint share in worldwide GDP of the BRICS grouping has overtaken that of the G-7 in 2020. However, China’s economy dominates BRICS, constituting 17.6 per cent of global GDP.
In the wake of the lack of warmth in ties with Beijing over the border issue, and China’s continuous provocations, including by objecting to the visit of national leaders to Arunachal Pradesh and assigning “names” to 11 places in the bordering northeastern state, having Beijing dominate the discourse over a common currency in BRICS would not be a very welcome idea.