Story By Filip De Mott |Business Insider|The dollar’s dominance is under no real threat from emerging market currencies, India’s oil and gas minister told CNBC, despite recent efforts to de-dollarize global trade.
The dollar is the dominant form of payment for commodities like oil. But in June, Indian refiners used China’s yuan to buy Russian crude. And earlier this month, an Indian refiner used rupees to buy oil from the UAE.
When asked about the dollar’s role in the oil market, Hardeep Singh Puri replied, it’s “not so easy” to replace it. When pressed further if the dollar’s prominence will remain, he replied, “Yes, I think it will.”
His comments come after the BRICS bloc of developing economies held its 15th annual summit last week, where ideas for how to de-dollarize were discussed.
The coalition — made up of Brazil, Russia, India, China, and South Africa — has previously floated the concept of a new BRICS currency, but support for such an initiative was relatively lacking during the event. More emphasis was laid on efforts to increase trade in existing local currencies.
In his interview with CNBC, Puri said if the BRICS coalition expands, “Does that mean an alternate global currency is coming? Come on — I’ve been in this game long enough.”
He added, “International arrangements, trading arrangements, payment arrangements, these have been in place for a long time.”
Some non-dollar trade deals have already been met with challenges. For instance, separate reports said recently that despite prompting from the Indian central bank, private-sector companies have remained hesitant to purchase oil in currencies outside the dollar.
And evidence is still lacking of significant dollar erosion. In fact, the greenback recently hit an all-time high in its share of global transactions, according to recent data from the SWIFT payments system. As of July, it accounted for 46% of international trade.
“I wish all the currencies very well. I wish the Indian rupee would be the lead currency in the world. But I’m also a realist,” Puri said on Friday.
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