"BRICS New Delhi Declaration Makes Limited Progress on Local Currency Trade"
Local currency trade
settling bilateral trade in the currencies of the trading nations, bypassing the US dollar.
De-dollarisation
reducing global dependence on the US dollar as the primary reserve and trade currency.
BRICS began as a grouping of five major emerging economies: Brazil, Russia, India, China, and South Africa. The grouping expanded at the 16th BRICS Summit in Kazan to include Egypt, Ethiopia, Iran, the United Arab Emirates, and Indonesia, bringing total membership to ten. The institutional architecture of BRICS rests on two pillars created by the Fortaleza Declaration of 2014: the New Development Bank (NDB), headquartered in Shanghai, which was established by BRICS members (not by APEC or any other grouping), and the Contingent Reserve Arrangement (CRA), designed as alternatives to the World Bank and the IMF respectively.
The shared grievances binding BRICS members are structural. The SWIFT financial messaging network has been weaponised as a geopolitical instrument, with Russia and Iran cut off under Western pressure. The WTO has in practice allowed developed countries to retain agricultural subsidies while pressing developing nations to liberalise. These frustrations explain why BRICS declarations consistently invoke sovereign equality and reform of the international order. A depreciating rupee, it is worth noting, improves the competitiveness of Indian exports in foreign markets by making each dollar earned worth more in rupee terms. This export-competitiveness advantage is precisely what India stands to lose if it shifts to local currency trade, a tension that sits at the heart of the New Delhi Declaration's cautious language.
The Delhi 2026 BRICS Declaration was a 45-paragraph consensus document produced under India's chairship. It condemned unilateral sanctions and tariffs, omitted any reference to Ukraine to preserve consensus, reiterated support for India and Brazil's UNSC reform aspirations, and included a multilateral condemnation of the Pahalgam terror attack. On local currency trade, however, the declaration was notably non-committal.
Local currency trade refers to bilateral or multilateral trade settled in the currencies of the trading countries rather than in a reserve currency such as the US dollar. The appeal is straightforward: countries avoid exchange-rate risk tied to dollar fluctuations, reduce dependence on dollar-clearing systems like SWIFT, and retain more monetary sovereignty. For sanctioned economies like Russia and Iran, the incentive is even more pressing, dollar exclusion makes local currency trade a necessity, not a preference.
A BRICS currency, by contrast, would be an entirely new common currency or a basket-backed unit for intra-BRICS settlement. This is conceptually distinct from local currency trade. India has maintained a cautious but broadly supportive stance on the former while being explicitly opposed to the latter. The opposition to a BRICS currency is driven by two concerns. First, China accounts for roughly two-thirds of all BRICS exports, meaning any common currency would be effectively yuan-dominated. …
Consider the following statements:
1.New Development Bank has been set up by APEC.
2.The headquarters of New Development Bank is in Shanghai.
Which of the statements given above is/are correct?
Consider the following statements:
The effect of devaluation of a currency is that it necessarily
1.improves the competitiveness of the domestic exports in the foreign markets
2.increases the foreign value of domestic currency
3.improves the trade balance
Which of the above statements is/are correct?
Consider the following statements regarding the New Development Bank (NDB):
1.It was established by BRICS through the Fortaleza Declaration of 2014.
2.Its headquarters is located in Beijing.
3.It was set up as an alternative to IMF liquidity support for member states.
Which of the statements given above is/are correct?
Match the following BRICS institutional mechanisms with their correct descriptions:
List I (Mechanism) — List II (Description)
A.New Development Bank — 1. Provides short-term liquidity support, analogous to IMF
B.Contingent Reserve Arrangement — 2. Provides infrastructure and development finance, analogous to World Bank
C.Fortaleza Declaration — 3. The 2014 BRICS document that established both A and B
D.SWIFT — 4. Dollar-clearing network from which Russia and Iran have been excluded
Select the correct answer:
Consider the following statements about the effect of currency devaluation:
1.It necessarily improves the competitiveness of domestic exports in foreign markets.
2.It necessarily increases the foreign value of the domestic currency.
3.It necessarily improves the trade balance.
Which of the above statements is/are correct?
With reference to BRICS local currency trade, consider the following statements:
1.India has used the UAE Dirham as an intermediary currency to pay for Russian oil.
2.China accounts for approximately one-third of all BRICS exports.
3.India has been explicitly opposed to a BRICS common currency but cautiously supportive of local currency trade.
Which of the statements given above is/are correct?
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