‘De-dollarisation certainly not our objective’: RBI governor on Trump’s 100% tariff threat over BRICS currency

Reserve Bank of India Governor Shaktikanta Das on Friday dismissed suggestions that India is pursuing de-dollarisation, clarifying the country’s stance amid threats from US President-elect Donald Trump to impose 100% tariffs on nations exploring alternatives to the US dollar.

“There is no step which we have taken that specifically wants to de-dollarise,” Das said during a post-monetary policy press conference in Mumbai. “Our effort is to de-risk our trade. Dependence on one currency can be problematic at times because of appreciation or depreciation.”

“We require a commitment from these countries that they will neither create a new BRICS currency nor back any other currency to replace the mighty U.S. dollar,” Trump wrote on X. “Any country that tries should wave goodbye to America.”

Das said the idea of a BRICS currency was raised by one of the member countries, and, while it was discussed, no decision has been taken.

“The geographical spread of the countries also is a factor which has to be kept in mind. Unlike the Eurozone, which has a single currency and geographical contiguity, BRICS countries are spread all over. That also has to be kept in mind,” the RBI governor said.

He stressed that India’s agreements for local currency trade settlements with some countries are aimed at safeguarding trade rather than reducing dollar usage.

“This is basically to de-risk our Indian trade,” Das said, adding, “De-dollarisation is certainly not our objective.”

The US dollar accounts for 58% of global foreign exchange reserves and dominates international trade and finance. However, BRICS nations have voiced concerns over the dollar’s weaponization in geopolitical conflicts and economic sanctions, particularly following Russia’s exclusion from the global financial system after its invasion of Ukraine.

The idea of a shared BRICS currency gained traction during the August 2023 Johannesburg summit, where Brazilian President Luiz Inácio Lula da Silva proposed a common currency to shield member states from dollar fluctuations.

At the recent BRICS summit in Kazan, Russian President Vladimir Putin posed with a bill which looked like a banknote, triggering speculations around new BRICS currency. However, the officials later clarified that Putin was gifted mock-up of a BRICS bill by some enthusiasts.