Indian Prime Minister Narendra Modi and Russian President Vladimir Putin are holding talks in Moscow, with the Rupee-Ruble trade deal as a top priority. The discussions will cover economic cooperation and defense deals. The Rupee-Ruble trade deal will strengthen the currencies of both nations and could diminish the dominance of the US dollar. This potential shift in trade dynamics follows Iran and Russia signing their first bilateral monetary agreement and India launching Unified Payment Interface (UPI) services in Sri Lanka and Mauritius. Strengthening the rupee and ruble through such agreements promises to reshape trade practices and foster greater economic stability in the region.
The Maldives is set to introduce India’s RuPay payment system to strengthen the Maldivian Rufiyaa. The move aims to reduce reliance on the US dollar and improve regional financial integration. India and China have agreed to use their local currencies for bilateral trade, potentially cutting Maldives’ annual import costs by almost half. Indian High Commissioner Munu Mahawar assured that India would support the Maldives in making import payments in Indian Rupees. RuPay, created by the National Payments Corporation of India (NPCI), is widely accepted in India and several other countries.
This development aligns with the Maldives' efforts to reduce its reliance on the US dollar and promote the use of regional currencies. The introduction of India's RuPay service will strengthen the Maldivian Rufiyaa and contribute to the country's financial stability. The move also reflects the growing trend of de-dollarization and the desire to improve regional economic integration.
India has been actively promoting the use of the Indian Rupee (INR) in bilateral trade to decrease reliance on the US dollar. The country has already started trading in rupees with Nepal, Bhutan, and Singapore, and neighboring countries like Sri Lanka and Bangladesh have also shown interest in trading with India in rupee. The use of local currencies in international trade reduces transaction costs and eliminates the need to convert transactions into a third currency.
The shift by the Maldives and Russia away from the US dollar in trade reflects the growing trend of de-dollarization and the desire to promote the use of regional currencies. It also highlights the diversification of trade relationships and the potential for increased regional economic integration. The rise of multipolar currency narratives and the development of a unanimous currency by the BRICS alliance are challenging the dominance of the US dollar. The inflating debt metrics and degrading US economy are also putting pressure on the USD, raising concerns about its future.