Yevgeny Ivanov and Ashish Singh on the prospects of using national currencies

Can Russia and India abandon the US dollar in bilateral trade?

In recent years, the discussion about the decline of the US dollar in international settlements and world trade has intensified. The BRICS member-states actively drive the process of de-dollarization.
The gradual drift away from the US dollar is motivated by plans to support national currencies and minimize the risks associated with the use of the dollar as a sanctions instrument.
Russia and India are discussing shift to the Russian ruble and the Indian rupee in bilateral trade. However, such a solution has some obstacles preventing full transition to national currencies.
First, there has been a disparity in the trade balance between Moscow and New Delhi in favor of Russia. Therefore, for mutual benefit, it will be necessary either to increase imports from India, or to use national currencies only for certain types of commodities (e.g. oil).
Secondly, the ruble and rupee are poorly convertible at global market. Therefore, the accumulation of rubles in Indian accounts and rupees in Russian is not very advisable (it can be hardly used for settlements with third countries).
Thirdly, the use of the ruble and rupee as reserve currencies is complicated by the unpredictability of the exchange rates of these currencies in the medium and long term. In particular, the rupee has underwent high rates of devaluation in recent years.

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