There is an intense discussion in the economic world these days that, the global dominance of the US currency dollar will fade in the coming time. In this discussion, the currencies of many other countries are being projected as the global currency. The name of China’s currency Yuan is coming out prominently. On the other hand, it is also believed that in the meeting of BRICS countries in August, there will definitely be a new currency against the dollar. The discussion started when it was observed that the collection of US currency dollars in the global collection of all foreign currencies has been declining rapidly for the last few years. In nutshell, it can be said that many countries around the world no longer seem to be serious about the reserve of dollars. In this context, according to a report published by the IMF recently, the share of the US dollar in the global currency reserve has come down from more than 70 per cent in 1999 to 59 per cent in 2022. Euro is the second largest reserve after the dollar. If we talk about some other countries, then the Japanese yen and the British pound have a good reputation among all the currencies.

If the global dominance of the US currency dollar reduces or the currency of another country is recognized globally as an alternative to it, then it will surely be a huge decline in America’s global credibility in the last century. Here it is also very important to understand behind the atmosphere that is being created against America, American economic policies are clearly responsible. In this era of globalization, where every country is dependent on each other, yet they are increasing the ideologies of mutual economic development, even during that time all countries are always troubled by the aggression of the US dollar . For example, these days, the increase in interest rates by the US central bank artificially strengthened the dollar globally, which resulted in the weakening of the currencies of all countries and due to this, imports of all countries became expensive and which ultimately increased inflation in the domestic markets very fast. It is really sad that after struggling with two years of economic crisis during the Corona epidemic, almost all countries are troubled by inflation in the domestic markets these days. The common man is not able to understand that the real root cause of inflation is the dollar being more aggressive. Therefore, at the level of preliminary analysis, it can be understood that many countries of the world are now strengthening their mutual relations with other developed countries instead of America and are giving priority to the collection of foreign exchange of those big countries in international trade, as a result of which the amount of US dollar in the global collection of foreign exchange reserves is continuously decreasing.

In fact, this discussion is a part of international diplomacy and these days the ever-deepening friendship of Russia and China is also a main reason behind it. Both Russia and China want to respond strongly to the US stance on the global stage in the ongoing war between Russia and Ukraine for the last one year. As a result of this, China was the first to convert its huge reserve of US dollars into its own currency yuan. After that, it was raised prominently by Russia at the global level that in the coming times, China’s currency Yuan should replace the dollar. It is also necessary to clarify here that there is not much force in this claim of Russia because China’s share in the total foreign exchange reserves of all countries globally is only around 5 per cent. According to the latest IMF report, Russia alone accounts for one-third of China’s global currency reserves, equivalent to 336 billion, and the rest is from Brazil, Switzerland, Mexico, Israel, Chile and South Africa.

Now, if we talk about BRICS countries, which emerged in this century from the mutual alliance of countries with similar ideologies and similar development, the option of other currencies against the dollar must inevitably be discussed in their meeting in August. It is also necessary to clarify here that although the strongest economy under the BRICS group is China, which is equivalent to about 17 trillion US dollars, then India is second with about 4 trillion US dollars and Russia is around 1.7 trillion US dollars. There is no doubt that India will never accept youth as an alternative to the dollar in BRICS as there are various economic and political reasons behind it. Under the analysis of BRICS countries, it will also be necessary to understand that India is the main target behind the close friendship of China and Russia, while other economic issues are in Brazil’s priority, on the other hand, South Africa is a very small economic country at the global level. Therefore, it is almost clear that China’s currency under BRICS is hardly seen as an alternative to the dollar.

Now if we talk about India’s foreign exchange reserve, which is around 530 billion US dollars these days, then the largest share of it is in the US dollar. It has to be understood here that Indian economic policies are more inclined towards America. However, due to the aggressiveness of the US dollar, many times the Indian stock market suddenly comes down. Crude oil also has to be paid more, as a result of which every commodity in the domestic market becomes expensive for the common man. As for India’s rupee becoming an alternative to the dollar, this path is not easy at present. Significantly, the recognition of the currency of any country as a global currency is mainly seen as having a democratic system in that country and a progressive ideology in economic policies. India retains both these things and India is also the fifth largest economy in the world, but it still has a long economic journey to cover because India’s export is very low. So it does not appear that India will extend its support to any other currency alternative to the dollar.

Dr. P.S. Vohra , Academician, Financial Thinker & Newspaper Columnist , Views are personal