India is trying desperately to de-dollarize. It seems weaponizing SWIFT didn’t work out well in the long run, or even the short run. The world doesn’t trust us. India is desperately trying to de-dollarize.
J.P. Morgan published an article in August about the new fad – de-dollarization – also known as dump the dollar.
J.P. Morgan says “the US dollar’s hegemony” is in question. They don’t exactly use the word I would – the US weaponized the SWIFT system because we somehow thought it would hurt Russia which unfortunately is doing quite well.
The US dollar is maintaining its transactional dominance, but some Dollarization is taking place in FX reserves, says JP.
And here comes the biggie. The greenback is losing influence in oil markets. More and more sales are being transacted and non-US currencies.
Rapid de-dollarization is not in the cards, says JP. That’s because of our long-standing global network of alliances and partnerships.
The problem, of course, is the entire West is losing its dominance as the rest of the world grows its economy and its values.
India’s minister said in August that de-dollarization is a long way off despite oil trades settled in the yuan and ruble. Displacing the dollar is “not so easy,” he said. The world is dealing with something that’s been in place for a very long time. India’s minister would like to transact everything in rupees. That’s his personal preference.
The US cut Russia off from SWIFT, but people are still buying Russia’s oil so they transact in yuan or Rubles.
However, the de-dollarization era has begun. India and the UAE agreed to settle oil transactions in their national currencies.
At Christmas time, India tried to increase international acceptance of its currency, but it floundered. No oil trades were settled in rupees during the financial year 2022 to 2023, according to the Press Trust of India. Countries from China to Russia, and India have been seeking to rely less on the dollar in global transactions. BRICS could help make this happen at some point as more and more nations seek to join.
India desperately wants to de-dollarize, but they’ve hit a wall. Its trade partners are reluctant to accept rupees. Global oil suppliers are resistant to ruble payments.
It’s not just India. many nations, including China Brazil, and so on want to internationalize the national currency.
Last year, India’s central bank allowed local importers to open special overseas bank accounts that would enable making rupee payments to their trading partners. So far it’s not going too well
If the US keeps weaponizing SWIFT, spending wildly, and moving towards crashing the economy, then they will accelerate de-dollarization, and fast. However, a ubiquitous currency is far more reliable and desirable.
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