India differs with China on BRICS currency

April 11th, 2011 - 10:50 pm ICT by ANI  

New Delhi, Apr 11(ANI): While China is pressing BRICS grouping hard to shun US dollars as an exchange currency and is urging rest of the partners to use local currencies as an alternate to US dollars, India does not seem to be too amused with the idea.

Briefing reporters in New Delhi today, Secretary of Economic Affairs in the Ministry of External Affairs, Manbir Singh said: “The grouping was yet to reach that stage and before any such step, pros and cons needed to be considered to see whether it is compatible with national laws.”

In November 2010, Russia and China had agreed to use their currencies in bilateral trade.

Furthermore, at the second BRIC summit in April 2010, the leaders of the four BRIC economies agreed to study ways to make use of their currencies in bilateral trades.

However, despite these expressions of intention, the dollar continues to dominate intra-BRICS and international BRICS trade.

According to the China Daily, “BRICS economies hold 40 percent of the world’s currency reserves, the majority of which is still denominated in US dollars”.

As BRICS economies emerge, its contribution to the world economy grows in strength and US economy wanes, there is a growing confidence in the BRICS member states in general and especially among Russia and China that their local currency could be used as an alternate to US dollar which has been dominating the world trade since decades.

Manbir Singh added that currencies like Dollar and Yen are freely exchangeable.

At the same time, he said that EXIM (Export-Import) banks of the BRIC countries have been talking on this matter.

On April 14, the third BRIC summit will be held in the southern Chinese city of Sanya and will for the first time feature South Africa, which will join Brazil, Russia, India and China to discuss matters of common interest to the bloc such as trade, politics, climate change, and global security.

And so, BRIC becomes BRICS.

Goldman Sachs says the BRIC economies will potentially constitute four of the five largest economies by 2032. (ANI)

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