BRICS currency may reduce Dollar Dominance

India not in a hurry

Dollar has been a danger or a darling depending on the shifting tides of trade, currency and geopolitical wars. The most affected due to Dollar Dominance are BRIC countries. BRICS, originally Brazil, Russia, India, China, and South Africa, is now a 11 members’ and 10 official partners’ forum. The 11 members have 25% of global trade share and including volumes of 10 official partners, the global trade share is 32%. BRICS 2009 summit heard first call on reducing US Dollar usage.

BRICS Business Council proposed in 2018 for an alternative local currency payment framework among its members. In August 2023, Brazil suggested a common trade currency for BRICS to avoid exchange rate fluctuations among the members. In January 2026, RBI suggested linking of digital currencies among BRICS members to have transparent and effective regulatory control. Despite the sporadic discussions, BRICS common currency has been an orphaned idea.  In October 2024, at the 16th  Annual BRICS summit, Russia demonstrated a symbolic BRICS currency note having ‘R5’ letters representing Real, Ruble, Rupee, Renminbi, and Rand.

It was proposed as a digital asset titled ‘UNIT’ to be backed 40% by gold and 60% by basket of BRICS members’ currencies. Specific blockchain was suggested for independent operations avoiding the western financial network. Among all members, Russia has greater motivation to have BRICS currency. It has sanctions and restrictions on access to USD and Euro based financial infrastructure which is dominantly spread around the world. Russia needs alternative currency which will allow it to have an active participation.

On August 7, 2026 upon conclusion of 2-days BRICS trade and industry ministers meeting at Jaipur, India declared that it is not in favour of BRICS currency and rather will oppose. Once part of BRICS common currency, India will have constraints in responding to inflation, growth, stability, liquidity, and other factors and measures. These factors have varied intensity, degree and nature in each of the BRICS members and specifically in India.  India can reasonably handle Dollar dominance but cannot handle Yuan dominance at all. Since India has border disputes and trade competition with China, BRICS currency with higher voting power for China could be a detriment to India.

A common currency requires a full-fledged framework with collective decision-making authority, coordinating banking framework, dispute resolution body, settlement authority and a monitoring agency. To sustain as a BRICS currency, it should also have payment connectivity, currency swap arrangements, and if possible linked central bank digital currencies (CBDCs).  For India, agreeing for an amateurish currency will strain its economic relations with US, Europe, Japan, and Gulf Countries without any immediate or medium-term benefits. In any case, monetary sovereignty is very important for India. Since the proposed alternative common currency impacts monetary sovereignty, India is loud in opposing BRICS currency.

- (Dr. Kishore Nuthalapati is the Regional Director of PRMIA, US for Hyderabad Chapter covering Telangana and Andhra Pradesh. He is serving as the CFO of BEKEM Infra Projects Pvt Ltd, Hyderabad, India. Views are personal.)