The BRICS alliance, comprising Brazil, Russia, India, China, and South Africa, remains divided on the issue of adopting a new currency to replace the U.S. dollar. Since the BRICS summit held in Kazan, Russia, in October last year, discussions have intensified regarding the feasibility of a common currency. However, the election of Donald Trump as U.S. President in January and the subsequent global trade wars have further complicated the debate, with member nations struggling to reach a consensus.
Among the BRICS nations, India has openly distanced itself from the idea, showing no inclination toward abandoning the U.S. dollar. Indian Foreign Minister S. Jaishankar, during a recent visit to the UK and Ireland, reaffirmed India’s position, stating that the dollar remains a pillar of international economic stability. His remarks come at a time when BRICS nations have failed to finalize a common framework for an alternative payment system.
Strengthening India-U.S. Relations Amid Global Trade Tensions
Jaishankar’s statements align with India’s growing economic and diplomatic ties with the United States, particularly amid the escalating trade war between Washington and Beijing. The Trump administration has imposed heavy tariffs on China, warning that any attempt by BRICS to challenge the dollar’s dominance could provoke severe U.S. retaliation. While Russia continues negotiations with the U.S. over the Ukraine conflict, India is strategically reinforcing its partnership with Washington to avoid potential trade restrictions.
Despite its closeness to the U.S., India has also expressed a desire to maintain balanced relations with China. Jaishankar acknowledged that although India and China have their differences, diplomatic efforts should continue to ensure stable economic ties.
China’s Push for the Yuan as a Global Currency
China has been at the forefront of advocating for an alternative to the U.S. dollar, particularly since the 2008 financial crisis. The country has actively signed currency exchange agreements with several trading partners to promote the yuan as an international reserve currency. Beijing remains committed to persuading BRICS members to reduce their reliance on the dollar, despite India’s reluctance to support the initiative.
Brazilian President Lula da Silva has also long championed the idea of a BRICS currency, aligning with China and Russia on the issue. Russia, in particular, has escalated calls for an independent payment system following the severe Western economic sanctions imposed after the Ukraine conflict.
Future of BRICS Currency Plans Remains Uncertain
The ongoing divide within BRICS raises questions about the feasibility of establishing a unified financial system independent of the U.S. dollar. While China, Russia, and Brazil remain committed to seeking alternatives, India and South Africa have adopted a more cautious approach. The evolving geopolitical landscape, particularly under the Trump administration, will continue to shape BRICS’ economic strategy in the coming years.
For now, the U.S. dollar remains the dominant global currency, with BRICS struggling to achieve consensus on its potential replacement. Whether the bloc can overcome its internal differences and establish a new financial system remains to be seen.