Dedollarization has become a prerequisite for joining the BRICS alliance, and Nigeria, aspiring to be part of this influential bloc, has demonstrated its commitment by eschewing the dollar in its transactions with India
In a significant move echoing a growing trend of dedollarization, India has once again taken a bold step by eliminating the dollar from its trade dealings with Nigeria, media reports said.
The abandonment of the dollar marks a notable shift in the economic landscape, particularly among emerging powers like the BRICS nations. China and Russia have already expelled the dollar from their trade exchanges, with over 90% of their transactions now conducted in rubles or yuan.
Dedollarization has become a prerequisite for joining the BRICS alliance, and Nigeria, aspiring to be part of this influential bloc, has demonstrated its commitment by eschewing the dollar in its transactions with India.
The bilateral agreement between India and Nigeria includes the establishment of a national currency settlement system to strengthen their trade ties. Nigeria stands as India’s second-largest trading partner in Africa, with trade volumes reaching $12 billion in 2022 and $8 billion in 2023.
As nations brace for potential upheavals in the international monetary system, initiatives like the one between India and Nigeria exemplify a concerted effort to reduce dependency on the dollar and foster greater economic autonomy
The trade relationship between the two nations spans various sectors, including pharmaceuticals, renewable energy, agriculture, education, and transportation. Notably, Nigeria imports a substantial amount of Indian pharmaceutical products in exchange for its oil.
Under the new arrangement, transactions will be settled in Indian rupees and Nigerian nairas, marking a departure from the reliance on the dollar. The official Indian delegation, comprising representatives from the Reserve Bank of India (RBI), EXIM Bank of India, and National Payments Corporation of India (NPCI), facilitated this transition.
This move underscores a broader trend of global dedollarization, with more than 20% of global oil purchases no longer conducted in dollars. The recent inclusion of three major oil exporters—Saudi Arabia, Iran, and the United Arab Emirates—into the BRICS framework further signals a seismic shift in the international monetary system.
As emerging nations grow weary of the United States’ dominance through the petrodollar system, geopolitical tensions continue to simmer. The implications of this dedollarization trend are profound, hinting at a reconfiguration of global economic power dynamics.
As nations brace for potential upheavals in the international monetary system, initiatives like the one between India and Nigeria exemplify a concerted effort to reduce dependency on the dollar and foster greater economic autonomy.
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