India will stop using the US dollar from 2025 as announced by Indian Prime Minister Narendra Modi! So the world’s 1st in population and 5th economy (consistently ahead of Britain) is de-dollarizing all its transactions and not only those it had with Russia and China.
The founding member of BRICS chooses monetary independence from the US which means it made a geopolitical choice. It rejects the “bloc” of the West and joins the rival “bloc” established by Russia and China.
The White House announced that Indian Prime Minister Narendra Modi’s upcoming visit to the US is an opportunity to “affirm the country’s deep and close relationship with the US”.
The US chooses to keep a “silent” stance because it needs India as its only hope to play the role of the American “Trojan horse” in Eurasia.
As in the case of Turkey and Erdogan, the Americans believe that Modi will not be prime minister forever as he has ruled India for nine years and has set the goal in the coming years for his country to become the third economic power on the planet, surpassing Japan and Germany. But the choice to de-dollarize is strategic and will not change with any change of power in India.
The dollar’s share of global monetary reserves has fallen from about 73% in 2001 to about 55% in 2021. Then, last year, it fell to 47% of total global reserves.
By comparison, the euro is a distant second, accounting for around 20.5% of global foreign exchange reserves, while the Chinese yuan accounted for just 2.7% over the same period, but it is clear that specific processes of dollar destabilization have been set in motion.
China’s checkmate moves
China is one of the most active players in this push, given its dominant position in global trade right now and as the world’s second largest economy.
Based on calculations from IMF data on the direction of trade in 2022, mainland China was the largest trading partner of 61 countries when both imports and exports are combined. By comparison, the US was the largest trading partner in 30 countries.
As China’s economic power continues to grow, this means it will exert greater influence over global financial institutions and trade.
China – long among the top 2 foreign holders of US Treasuries – has been steadily reducing its holdings of US Treasuries. Specifically, it held nearly $849 billion in US government bonds as of February this year, according to the latest data from the US Treasury Department.
This is at a 12-year low, according to historical data. But China is not the only country calling for a move away from the US dollar.
Brazilian President Lula visited Beijing in April, where he reportedly called for less reliance on the US dollar for global trade.
Trade between Brazil and China will reach $150 billion in 2022, a 10 percent jump from a year ago, according to S&P Global Market Intelligence. During a recent visit to China, Malaysian Prime Minister Anwar Ibrahim reportedly proposed the creation of an “Asian monetary fund” to reduce dependence on the US dollar. Malaysia’s trade minister also acknowledged Malaysia’s concerns about Asia’s reliance on the US dollar.
