Topline
The head of India’s central bank on Friday said the country was not pursuing a policy of de-dollarization and no decisions have been made so far on the BRICS currency, a week after President-elect Donald Trump threatened to slap 100% tariffs on the BRICS group of nations if they attempt to replace the dollar in international trade.
Indian Prime Minister Narendra Modi, Russian President Vladimir Putin and Chinese President Xi … [+] Jinping attend a family photo during the BRICS summit in Kazan.
Key Facts
In a press briefing on Friday, Reserve Bank of India Governor Shaktikanta Das was asked about Trump’s comments and said: “There is no step which we have taken that specifically wants to de-dollarize.”
Das said India “entered into local currency-denominated trade agreements” to reduce risk in some circumstances, as “Dependence on one currency can be problematic at times because of appreciation or depreciation.”
Das reiterated that de-dollarization was “certainly not our objective” and said the concept of a BRICS currency was raised by one of the members of the group, but no decision has been taken on the matter.
“The geographical spread of the countries has also to be kept in mind, unlike the euro zone which has geographical contiguity,” Das added.
When asked specifically about Trump’s tariff threat, Das said it was too early to comment and added, “Let the policy come first.”
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What Is The Brics Currency?
BRICS is an acronym for Brazil, Russia, India, China and South Africa, and it initially began as a group of top developing economies and an alternative to the G7 Group of developed nations. Last year, the BRICS group announced an expansion that resulted in the addition of four new members: Egypt, Ethiopia, Iran and the United Arab Emirates. Earlier this year, Brazilian President Luiz Inacio Lula da Silva called on the BRICS nations to create an alternative currency to replace the dollar in global trade. At the most recent BRICS summit in Kazan, Russia in October, a symbolic BRICS banknote was unveiled while the group endorsed the use of their local currencies to settle bilateral trade.
What Did Trump Say About Brics?
In a post on his Truth Social platform last week, Trump lashed out at the idea of a BRICS currency and warned he would impose a 100% tariff on all imports from BRICS members if they followed through with a plan to establish such a common trade currency. In his post, Trump wrote that the tariff would target all BRICS members unless they commit “that they will neither create a new BRICS Currency, nor back any other Currency to replace the mighty U.S. Dollar.” He then added: “There is no chance that the BRICS will replace the U.S. Dollar in International Trade, and any Country that tries should wave goodbye to America.”
Further Reading
Donald Trump Threatens BRICS Countries—Including Russia, India—With 100% Tariffs (Forbes)
