The multipolar concept has truly swept the currency vertical in recent times, as nations are now bolstering efforts to elevate local currency narratives. In one such effort, China and India have collectively decided to dump US dollar usage and rather adopt a local currency approach to conduct trade proceedings with the Maldives.
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India and China Ditch the USD Again: What’s Happening?
The Maldives, in a statement shared on Wednesday, outlined that India and China have agreed to conduct their trade proceedings with the nation in local currencies instead of the US Dollar. This roughly entails that the nations will not use the USD to take their trade proceedings forward in a novel sentiment shift.
Explaining the primary reasoning behind this shift, the Maldives reiterated how, by conducting trade in local moolah, the nation will save nearly 50% of its $1.5 billion annual import bill levied by the two countries.
Furthermore, Maldives Economic Development Minister Mohamed Saeed later shared that he held a meeting with Indian High Commissioner Munu Mahawar in New Delhi. The meeting was primarily conducted to discuss payment settlement techniques in local currencies, signifying a shift away from the US dollar.
This isn’t the first time nations have decided to promote local currency trading on an international level. India has adopted a local currency policy to trade with Nepal and Bhutan. Similarly, Russia and China have also started to make use of the Ruble and the Chinese yuan to conduct primary commercial trading by ditching the US dollar in the process.
The Future of the US Dollar
While analysts at Morgan Stanley continue to assert US dollar dominance, the US currency, to a certain extent, has certainly borne the brunt of the recent currency shift. With countries exploring alternatives to the US dollar, the US may encounter volatility in its currency index and, at the same time, may experience stark economic conditions spiraling out of control.
As the US debt metrics continue to skyrocket at a deadly pace, the nation is currently standing at a dangerous precipice, which could drastically hamper its economic progress.
Also Read: Chinese Yuan Is Humbling The US Dollar: What Is The Future Of USD?
Per Yahoo Finance, the debt “would slow economic growth, push up interest payments to foreign holders of U.S. debt, and pose significant risks to the fiscal and economic outlook; it could also cause lawmakers to feel more constrained in their policy choices.”