- China and India have garnered massive savings, $10 billion and $7 billion respectively, by bypassing the US dollar in oil transactions with Russia.
- The increasing shift among BRICS countries toward local currencies for oil transactions is gradually diminishing the dominance of the US dollar in international markets.
BRICS Powerplay: Local Currencies in the Limelight
In a strategic maneuver that’s reverberating across the global financial landscape, BRICS nations, notably China and India, are capitalizing on the US economic sanctions against Russia. By sidestepping the US dollar and pivoting towards trade settlements in their native currencies, these countries are reaping substantial financial benefits.
Oil Transactions: Bypassing the Greenback
China’s astute decision to abandon the US dollar in oil trade, opting instead for the Chinese Yuan, has led to a staggering savings of $10 billion. India, not to be outdone, has managed to pocket savings of $7 billion. This windfall comes from acquiring oil at preferential rates from Russia since the beginning of February 2022. Delving into specifics, India has bought a colossal $186.45 billion worth of crude oil from Russian channels, intriguingly facilitated through China’s laundered oil pipeline.
This shift away from the dollar isn’t confined to just China and India. Saudi Arabia, another pivotal player, has been sourcing crude oil from Russia at reduced prices, subsequently disseminating it across Europe. Adding another layer to the narrative, Saudi Arabia has intimated its willingness to entertain local currencies as the medium of exchange for oil, pushing the US dollar further to the periphery.
Russia’s role in this geopolitical chess game is evident. By proffering oil and welcoming local currencies in lieu of the US dollar, Russia is adroitly sidestepping the sanctions.
Meanwhile, India is broadening its strategic gambit. An enticing oil accord with the UAE saw India leverage the Rupee, bypassing the US dollar once again, to secure millions of barrels of the precious commodity.
The undercurrents of these maneuvers are profound. The BRICS consortium is tactically dialing back their reliance on the US dollar, traditionally the linchpin of cross-border transactions. This recalibration is not merely about immediate economic gains; it represents a seismic shift in global financial dynamics. As local currencies increasingly emerge as the protagonists on the world stage, the once unassailable US dollar is being nudged into the wings.