India and China have decided to ditch the US dollar for import payments, opting for their local currencies instead. This move, confirmed by the Maldives government, is yet another significant change in international trade practices.
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These BRICS members plan to strengthen their economies and reduce reliance on the dollar by using their currencies. As per the Maldives, this decision will save them nearly 50% of their $1.5 billion annual import bill from these two countries.
India and China Are Determined to Ditch USD
Maldives’ Economic Development Minister Mohamed Saeed mentioned that he recently met with the Indian High Commissioner Munu Mahawar. Mahawar confirmed India’s support for arranging import payments in Indian Rupee. Similarly, Saeed received a letter from China’s Commerce Ministry, assuring cooperation to facilitate payments in Yuan, following a request from President Mohamed Muizzu.
The Maldives imports goods worth $780 million from India and $720 million from China annually. In April, Saeed announced that discussions were ongoing with India and China to allow import payments in Maldivian Rufiyaa. This would reduce the pressure on the Maldives’ foreign exchange reserves.
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In July 2023, the Government of India declared that Maldives was among the 22 countries allowed to open Special Rupee Vostro Accounts (SRVAs) by the Reserve Bank of India. Speaking to a state-run media outlet, Saeed stated, “Maldives imports between $600-700 million in commodities from both India and China each year. Therefore, we import around $1.4 billion to $1.5 billion in commodities annually from both markets combined.”
Russia, another BRICS member, recently purchased $4 billion worth of arms from India using local currencies instead of the US dollar. There is a growing trend among BRICS nations to bypass the dollar in favor of their local currencies.
Russian officials used India’s special Vostro bank accounts to settle the $4 billion arms deal payment. These accounts, overseen by the Reserve Bank of India, allow 22 countries to trade in local currencies. This arrangement supports bilateral trade and also helps Russia bypass US sanctions.
Moreover, India is also settling its trade with Russia using local currencies through Vostro accounts. An official, speaking anonymously, confirmed, “Indian exports are also being settled from the Russian funds in the Vostro account.”
Cryptopolitan reporting by Jai Hamid
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