BRICS: Russia Settles 90% of Its Transactions in Local Currencies

Local currencies of the BRICS already allow Russia to settle 90% of its transactions with its alliance partners, according to the Kremlin. However, this figure does not represent a collective goal or a promise to abandon the dollar by all member countries.

In Brief

• Russia already settles 90% of its transactions with BRICS in local currencies.
• This threshold concerns Russia and does not constitute a common goal for the BRICS.
• The Kremlin refuses to present this development as a de-dollarization policy.
• Settlements in national currencies respond to Western sanctions and financial restrictions.
• The BRICS do not have a single currency and maintain their own monetary policies.

Russia Already Reaches the 90% Threshold

Now, Russia conducts 90% of its financial operations with its BRICS partners in national currencies. Dmitry Peskov, the Kremlin spokesperson, disclosed this figure to Indian journalists ahead of the summit held in New Delhi.

Such a portion concerns Russia's exchanges with other members, including India. However, it does not describe the situation of the entire bloc. It is also a level already reached, but not a target to be included in the future joint declaration.

Four important pieces of information help explain this threshold correctly:

• The 90% only concerns transactions of Russia with its BRICS partners;
• The figure describes a current situation and not a future target;
• Payments use several national currencies, without a common currency;
• No collective commitment to abandon the dollar has been announced.

Dmitry Peskov stated:

The use of national currencies is not a de-dollarization policy. We are simply doing what best serves our national interests.

The Kremlin spokesperson attributes this progress to pressures exerted by Western countries. Thus, sanctions and financial restrictions have led Moscow to multiply settlements in rubles, yuan, rupees, and in the currencies of its other partners.

The Kremlin Refuses to Speak of De-dollarization

For the Russian Federation, the use of local currencies primarily constitutes a response to a practical necessity. Therefore, Peskov summarized this stance by indicating that Moscow uses its own currencies if certain countries prevent it from using theirs.

An increase in bilateral settlements does indeed reduce immediate dependence on the dollar. However, it does not mean that the American currency disappears from the entire transaction. The price of goods can still be determined in dollars before its conversion into a national currency.

Companies must also manage fluctuations in exchange rates, the limited liquidity of certain currencies, and trade imbalances. A state that accumulates a currency difficult to reuse may encounter obstacles when repatriating or converting its revenues.

It should also be noted that the BRICS do not have a single currency comparable to the euro. Each member of the alliance maintains its monetary policy and economic priorities. The bloc mainly explores payment systems that can link national currencies and reduce reliance on Western financial infrastructures.

Thus, Peskov's remarks mark a Russian advance in bilateral exchanges. It does not represent proof that the eleven members are already applying the same policy or wish to adopt a common timetable for de-dollarization.

A Joint Declaration Remains Uncertain in New Delhi

Russia hopes that the summit on September 12 and 13 will lead to a joint declaration. Thus, discussions should cover security, finance, economy, and new technologies. Moscow also wishes to consolidate the image of the BRICS as a pillar of a multipolar world order.

However, the adoption of the text requires consensus. Also, Iran and the United Arab Emirates defend divergent positions on the crisis in the Middle East. These disagreements had already prevented the group's foreign ministers from issuing a joint statement in May.

The existence of these tensions has been acknowledged by Peskov. He offers Russia's assistance in facilitating normalization. Moreover, he believes that Indian diplomats can find a formulation compatible with the interests of both countries.

The alliance now gathers eleven economies after the arrival of Egypt, Ethiopia, Iran, the United Arab Emirates, Saudi Arabia, and Indonesia. This expansion consolidates its weight but also makes compromises more difficult.

The final declaration could allow for measuring the degree of agreement on the local currencies of the BRICS. In the absence of a common quantified target, the 90% threshold will remain a result specific to Russia's exchanges.