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De-dollarization: India, Indonesia to use national currencies in bilateral trade

Monday, 17 July 2023 8:36 AM [ Last Update: Monday, 17 July 2023 10:09 AM ]

A money trader counts Indian currency notes at a market in Kochi, India, March 27, 2020. (File photo by Reuters)

India and Indonesia have agreed to use their local currencies in bilateral trade amid a spreading trend of de-dollarization in countries across the globe weary of the negative impact of the greenback's fluctuations.

According to a senior Indian government official cited by US financial media on Monday, Delhi and Jakarta plan to settle bilateral transactions in local currencies.

The two heavily-populated countries also plan to link up their fast payment systems.

The agreements take place as India signed a similar pact with the United Arab Emirates over the weekend, which will see more trade done in the national currencies of the two countries, rupees and dirhams.

India, UAE sign deal to use national currencies in bilateral trade, ditching US dollar

India and the United Arab Emirates sign an agreement to implement bilateral trade in local currencies instead of the US dollar.

According to the anonymous Indian source, Delhi and Jakarta are planning to ease trade by spurring cross-border fund transfers in local currencies, and by linking up their fast payment systems to one another.

The source further said that Indian Finance Minister Nirmala Sitharaman and her Indonesian counterpart Sri Mulyani Indrawati had reviewed the proposals for the bilateral trade pact which had been completed.

The pact had reached its advanced stage and an announcement could be made once officials from the two sides get done with the formalities of the pact, the source added.

The planned pact with Indonesia comes as India inked a similar agreement with Bangladesh earlier this year.

Demise of dollar: India, Bangladesh join hands to ditch US currency in cross-border trade

India finally joins hands with Bangladesh to do cross-border trade in their own currencies, the Indian rupee (INR) and the Bangladeshi taka (BDT), making Bangladesh the nineteenth country to ditch the US dollar.

The recent moves are part of the global de-dollarization trend, with countries trying to rid their dependency on the greenback and seek out and utilize other currency options.

Last month, US Treasury Secretary Janet Yellen said Washington should expect a decline in the dollar share of the global reserve.

Yellen even admitted that the global de-dollarization move was gaining pace, describing the spreading trend as a natural desire to diversify.

Experts, however, see the weaponization of the US dollar, and Washington's insistence on imposing sanctions on perceived adversaries, as the factors that have led world countries to be wary of utilizing the greenback in their financial transactions, and to seek new means and solutions for doing international trade.

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