The importance of the US dollar will weaken: Jaishankar on the de-dollarization trend

The Minister of Foreign Affairs of India (EAM) Jaishankar said that "the importance of the US dollar" (US dollar) would be "diluted" in the years to come.

“De-dollarization, in my opinion, is exaggerated. Because at the end of the day, you see how much impact the dollar has had on everyone,” Jaishankar said at an election-related event at the National Stock Exchange (NSE) in Mumbai on Monday.

However, Jaishankar highlighted two points about the broader global trend of declining use of the US dollar.

"If country X and Country Y, both have problems with the United States, they will reduce the risk of their transactions by finding a third or one on one. We begin to see a lot of this. You are seeing many other changes in the world.

How did the country start to deal directly, not necessarily passing through the United States? It is bound to have a currency implication,\" Jaishankar highlighted.

"The second is that in many parts of the world, there is a shortage of the dollar.

I go to Africa, one of the regular complaints we hear is that we would love to trade with you but we don’t have hard currency,” the top Indian diplomat stressed.

He said trade settlements in local currencies and Indian rupees (INR) have become "more attractive".

“This is a solution to a problem…in our immediate environment. If you ask me, I expect big changes in the next five years. I think we're going to see a lot more trade settlements in local currencies than we've seen in the past," the foreign minister said.

 "To this extent, I would say that such dependence on the dollar or the meaning of the dollar will be diluted," said Jaysankar.

Since 2022, the Reserve Bank of India (RBI) has enabled banks in more than 20 countries to open special Rupe Vostro (SRVA) accounts in partner banks in India, which aims to optimize trade in national currencies.