Dedollarisation fails before starting, Russia and India halt rupee trade

[stompix]

Over the past months, we have been bombarded with articles about the global de-dollarisation, how countries will quit using the USD, how the petrodollar is doomed, how the entire US economy is doomed once the usd is dropped, how the Zimbabwean dollar, the Argentian peso, the bolivar, the Iranian rial and other, can we even all them currencies? will definitely replace the dollar for trade settlements. And, if you're not so bright, it makes perfect sense, the evil greenback is holding the economies of emergent countries down, it's not corruption, it's not stupidity, it's not the lack of planning, the one who is to blame is the $.

So, some  leaders have come up with the idea, let's trade in our currency and prosper! Except for the fact that when you leave the realm of politics and propaganda for your voters and you enter the realm of economy, well, shit happens!
https://www.businesstoday.in/latest/in-focus/story/we-need-to-use-this-money-russia-says-it-is-unable-to-utilise-billions-of-indian-rupees-380345-2023-05-07

And the whole thing is pretty simple:
- there is no perfect trade balance between two countries, one will run a trade deficit with the other so one will end with a ton of useless monopoly money
- in order to use the monopoly money to trade with country C it would need to either convert them to a hard currency that everyone wants like the $,  or to the other country's fiat but at this point, you would have to trick them into accepting your surplus useless currency and who would want that?

Anyone who has read a bit of history would know about the Weimar inflation, it was caused mainly because Germany printed monopoly money to exchange them for $, and thus their own currency failed, because nobody wanted the Papiermark. And this is where we arrive to exactly the bilateral India-Russia trade:

Russian Foreign Minister Sergei Lavrov on Friday said that Russia has accumulated billions of rupees in Indian banks which it can’t use. This is a problem, Lavrov told reporters in Goa on the sidelines of the Shanghai Cooperation Organization (SCO) meeting, reported Bloomberg.
“We need to use this money. But for this, these rupees must be transferred in another currency, and this is being discussed now,” he said, as per the report.

Simple as that, ruble-rupee trade is good until you need to use all those money, and for the use, you have to exchange it into a trustable currency, at which point you realize nobody is taking monopoly money India can print unrestrained for good old $!

The chances of more countries using their useless fiat in order to settle trades?
Just as much as every single one of you denying a Bitcoin payment and choosing to be paid in PooGrow, which is an actual coin, btw!

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[SamReomo]

I agree with you, I don't know why everyone is going against the dollar and they just want the dollar to lose its value. Quitting of dollar doesn't makes sense because it's currently the internationally acceptable currency and can be used anywhere in the world without any issue. It's the most useful currency out there and without it I can't even imagine that how would they do trades. Their own fiat currencies can be used bilaterally but that currency won't be acceptable globally.

Well that was a pretty bad decision by Germany and their printing devalued the currency very badly. Their idea of printing infinite amount of notes worked against their plan and in order to purchase any thing they would have to carry many bundles of notes in bags.

The chances of more countries using their useless fiat in order to settle trades?
Just as much as every single one of you denying a Bitcoin payment and choosing to be paid in PooGrow, which is an actual coin, btw!

As long as their fiat is traded in their own countries or against dollar we can't consider that useless. You sense of humor is quite good but no body would every accept payments in PooGrow until its grown to acceptable levels. And, anything can happen in crypto-world because a useless meme coin can be acceptable by Tesla than why not PooGrow? That makes sense if you put it into an equation like that otherwise RIP PooGrow.

[Silberman]

I agree with you, I don't know why everyone is going against the dollar and they just want the dollar to lose its value. Quitting of dollar doesn't makes sense because it's currently the internationally acceptable currency and can be used anywhere in the world without any issue. It's the most useful currency out there and without it I can't even imagine that how would they do trades. Their own fiat currencies can be used bilaterally but that currency won't be acceptable globally.

Russia and other countries which have interests opposite to the US believe the dollar and its status as the world reserve currency of the world and as the petrodollar gives too much power to the US, and they are right, so they want to take that power away by using their own currencies to trade among them, however as much as we complain about the US printing too much money and the like, China, Russia and other countries are even worse currency manipulators than the US, which means they do not even trust each other when it comes to those exchanges on their local currencies, meaning this model seems destined to fail.

[EarnOnVictor]

I will summarise my reply because I might write an epistle if I should reply in full as it burns in me. Frankly, any currency is free to replace the USD if they dare to but I must assure you that they will always fail. The USD is the perfect no. 1 currency for the world's jobs as I know, it's jealous countries and haters that are behind this propaganda called a project to reduce the dominance of the USD.

For what? I don't really know. This is not child's play, "the USD makes the world go round."

Furthermore, is there any serious project aiming to limit the power and influence of the USD? I bet there is none. What China, Russia and any allied countries are doing is not realizable as they do not have the economic status to achieve that. The USD did not align with countries or beg them to take the mantle of leadership, it's the world that chose it due to its stance of stability and dependability.

China is the anchor of this, and of course, Russia is desperate, but anything planned under ganging up rather than letting economic demands be natural would not stand.

[jacafbiz]

I believe Dedollarisation is in work, and it is been tested now example is the India-Russia trade agreement to trade in their local currencies. The issue now is that the Dollar monopoly was built over the years and it would take  real work to work out real alternatives, Dollar is causing a lot of havoc to third-world economies all over the world and countries will look for ways to protect themselves, I think America is the only real loser here, if it works, good for them bad for America and if it doesn't work these countries will stick to statoquo

[yhiaali3]

Dedollarisation is not impossible, but the appropriate international climate has not yet been created for it, meaning that until now there is no global currency alternative to the dollar accepted by all countries of the world.

But if we look at history, this is not impossible, because before the dominance of the dollar, there was the pound sterling and the French franc, a dominant currency in the world in the nineteenth century. Of course, the reason is clear. England and France were the dominant powers in the world at that time.

Therefore, personally, I believe that Dedollarisation cannot be removed unless the United States collapses economically or loses its control over the world, as happened with England and France.

[hatshepsut93]

how the petrodollar is doomed

Originally "petrodollar" was just a name for dollars that are used for oil trade, but then someone came up with a theory that all USD value holds on this oil trade, and if countries will switch to other currency, USD will collapse. This theory completely ignore all other international trade conducted in USD, which is far bigger than just oil trade.

how the entire US economy is doomed once the usd is dropped

That's also a narrative without proper backing, why would US economy collapse if international trade will switch to other currency? Inflation alone can not kill economy, and it's not even clear that the supposed dedolarization will cause massive inflation.

[Sayeds56]

Originally "petrodollar" was just a name for dollars that are used for oil trade, but then someone came up with a theory that all USD value holds on this oil trade, and if countries will switch to other currency, USD will collapse. This theory completely ignore all other international trade conducted in USD, which is far bigger than just oil trade.

That's also a narrative without proper backing, why would US economy collapse if international trade will switch to other currency? Inflation alone can not kill economy, and it's not even clear that the supposed dedolarization will cause massive inflation.

You are correct that the term "petrodollar" was referred to dollars earned from the sale of crude oil in international trade. However, this concept evolved overtime, and now it is widely perceived that US dollar value influenced by demand for oil. Therefore, In case of any shift from dollar to any other currency or basket of currencies, could potentially have significant impact on value the of dollar and US economy.

Inflation is a complex issue and it is influenced by number of factors including devaluation of currency, and it is not yet clear how dedollarisation  will affect US dollar.

[stompix]

I agree with you, I don't know why everyone is going against the dollar and they just want the dollar to lose its value.

Years of brainwashing from their inapt governments blamed everything on external factors, not on their corruption, stupidity, and lack of innovation to keep up with the rest of the world. It's easier to say $ is bad than acknowledge your own mistakes.

Dollar is causing a lot of havoc to third-world economies all over the world and countries will look for ways to protect themselves,

Ok, please explain how the dollar is causing havoc in third-world economies and it's the dollar's fault not the fault of those economies?
While you're at it you might explain why a far larger percentage of the population in said countries is keeping their savings in $, unlike people in Western Europe or East Asia? When your own population is trusting more a foreign currency than your own, it's a clear sign the problem is elsewhere, right in your own backyard.

China is the anchor of this, and of course, Russia is desperate, but anything planned under ganging up rather than letting economic demands be natural would not stand.

Well said, it's Comecon once more, with the same mistakes but with far fewer advantages.

[Poker Player]

Lol. I am surprised the OP hasn't got any single merit for the thread, I am out atm.

Anyone who has read a bit of history would know about the Weimar inflation, it was caused mainly because Germany printed monopoly money to exchange them for $, and thus their own currency failed, because nobody wanted the Papiermark. And this is where we arrive to exactly the bilateral India-Russia trade:

...

Simple as that, ruble-rupee trade is good until you need to use all those money, and for the use, you have to exchange it into a trustable currency, at which point you realize nobody is taking monopoly money India can print unrestrained for good old $!

In other words, we often insist on seeing the defects of the dollar or the euro and how much is printed but without seeing the overall picture, which is that most currencies are even worse, some much worse.

Over the past months, we have been bombarded with articles about the global de-dollarisation, how countries will quit using the USD, how the petrodollar is doomed, how the entire US economy is doomed once the usd is dropped, how the Zimbabwean dollar, the Argentian peso, the bolivar, the Iranian rial and other, can we even all them currencies?

We can but I would call them garbage currencies, further emphasiing their junkiness.

I think I agree with you, OP, but not because I think the dollar as the fiat currency that it is is very good, it is just much less bad than the others.

[m2017]

~snip

They have been talking about dedollarization for quite a long time and are trying, sort of, to implement it. But look at any country - no one has yet been able to bring this to life. Why? Yes, everything is very simple. At the moment there are no adequate alternatives to the dollar. Let this be a bad option, but they could not think of anything better.

I will immediately be objected on this forum that there is an alternative and this is bitcoin. Yes, I agree, this is a great alternative, which I also like, but I have doubts whether bitcoin will be used as a replacement for the dollar in the world. It is easier for countries to create and control something of their own, rather than a decentralized and free digital currency, most of which is already in foreign (whale) hands. Whoever has the most concentrated BTC will have more strength, weight and power. Countries and governments will not want to share this with who knows who.

I expect that all these attempts at dedollarization are expected to fail in the near future, and as we see in the example of the ruble and rupee, the countries are not able to implement this in any way.

[serveria.com]

Over the past months, we have been bombarded with articles about the global de-dollarisation, how countries will quit using the USD, how the petrodollar is doomed, how the entire US economy is doomed once the usd is dropped, how the Zimbabwean dollar, the Argentian peso, the bolivar, the Iranian rial and other, can we even all them currencies? will definitely replace the dollar for trade settlements. And, if you're not so bright, it makes perfect sense, the evil greenback is holding the economies of emergent countries down, it's not corruption, it's not stupidity, it's not the lack of planning, the one who is to blame is the $.

So, some  leaders have come up with the idea, let's trade in our currency and prosper! Except for the fact that when you leave the realm of politics and propaganda for your voters and you enter the realm of economy, well, shit happens!
https://www.businesstoday.in/latest/in-focus/story/we-need-to-use-this-money-russia-says-it-is-unable-to-utilise-billions-of-indian-rupees-380345-2023-05-07

And the whole thing is pretty simple:
- there is no perfect trade balance between two countries, one will run a trade deficit with the other so one will end with a ton of useless monopoly money
- in order to use the monopoly money to trade with country C it would need to either convert them to a hard currency that everyone wants like the $,  or to the other country's fiat but at this point, you would have to trick them into accepting your surplus useless currency and who would want that?

Anyone who has read a bit of history would know about the Weimar inflation, it was caused mainly because Germany printed monopoly money to exchange them for $, and thus their own currency failed, because nobody wanted the Papiermark. And this is where we arrive to exactly the bilateral India-Russia trade:

Russian Foreign Minister Sergei Lavrov on Friday said that Russia has accumulated billions of rupees in Indian banks which it can’t use. This is a problem, Lavrov told reporters in Goa on the sidelines of the Shanghai Cooperation Organization (SCO) meeting, reported Bloomberg.
“We need to use this money. But for this, these rupees must be transferred in another currency, and this is being discussed now,” he said, as per the report.

Simple as that, ruble-rupee trade is good until you need to use all those money, and for the use, you have to exchange it into a trustable currency, at which point you realize nobody is taking monopoly money India can print unrestrained for good old $!

The chances of more countries using their useless fiat in order to settle trades?
Just as much as every single one of you denying a Bitcoin payment and choosing to be paid in PooGrow, which is an actual coin, btw!

I don't think dedollarisation is failing. More like it's in initial embryo stage and many things have to be done for the first time which makes things harder. I don't think in times of digital money there can be any issue with exchanging money. I don't think India really pays in paper money which is being held in a vault? They can sell rupees to some other country doing trade with India or pay for Indian goods etc. Or, even better, they can buy Bitcoin and then sell Bitcoin for rubles.

[Faisal2202]

Over the past months, we have been bombarded with articles about the global de-dollarisation, how countries will quit using the USD, how the petrodollar is doomed, how the entire US economy is doomed once the usd is dropped, how the Zimbabwean dollar, the Argentian peso, the bolivar, the Iranian rial and other, can we even all them currencies?

So you are talking about "BRICS" and yeah we have seen so many articles and videos on BRICS and how many other countries are willing to join these 5 countries (BRICS) single trade currency, i don't think the dollar can lose its value due to BRICS because it has set the great base from its origin and USA has made many bold moves to keep their dollar save (i don't want to talk about of bold moves) so what i think they will resist BRICS in some way. For more details you can read this article

Plus, i don't think solely Russia could devalue the Dollar by taking trade money in INR (Indian currency), that's why they are organizing big countries to come together so that an impact could be made on the dollar.

I am wondering, why Russia can't trade INR to use them, as there are financial restrictions from many firms on Russia due to war as stated above but why can't they just convert them, it indicated that in BRICS Russia is a weak point and i think until Russia don't settle the war, there will be no implementation of BRICS currency. And the USA does realize that.

[DrBeer]

Instead of a thousand words:
  - India buys oil from Russia for INR. True, due to fraud in prices (the "merit" of Indian corrupt officials) - the price in dollars is high (this is a topic for a separate conversation).
But in fact, Russia does not RECEIVE dollars. She gets - RUPEE.
This is the beginning of the joke, and now the main thing:

- India PROHIBITED the financial system of India to convert for Russia, the rupees that Russia has into DOLLARS!   This is what "fraternal help of the fraternal people" looks like.

The problem is that many, for some reason, decided that China and India really decided to abandon the dollar? Do you think they are idiots? No - idiots are those who now refuse the "healthy dollar", and kill the economy of their countries with the "sick yuan". Soon everyone will see how it all ends - the Chinese trap will slam shut ... India, having lost interest in Russia, will "wipe its feet on it" ... And leave it with a bunch of illiquid rupees. At the same time, do not forget - India resells Russian oil mixed with other varieties - for DOLLARS! Do you feel the grace of "chess composition"? East is a delicate matter !

[tjtonmoy]

Either one or both of the currency needs to be accepted worldwide as dollar, or there's no chance that they can replace the dollar with it. Which is not possible in a short period of time. Maybe in a long run, they can show progress, but these kinds of sudden acceptance will not take it far. And the main problem is they can just print money to exchange for other country's currency. Which is the problem, is being stated in the OP.
But one solution can be Bitcoin. But with the high volatility, I don't think any country will accept it suddenly to do international trades. But if they do, it could be a possible solution to this problem.
And I don't think it is that much necessary to de-dollarize the world.

[o48o]

I agree with you, I don't know why everyone is going against the dollar and they just want the dollar to lose its value. Quitting of dollar doesn't makes sense because it's currently the internationally acceptable currency and can be used anywhere in the world without any issue. It's the most useful currency out there and without it I can't even imagine that how would they do trades. Their own fiat currencies can be used bilaterally but that currency won't be acceptable globally.

Because of the war and the sanctions? That's only reason needed. Plus Russia wants to destabilize west, it always has.

Countries that have sanctions want to trade and that won't be happening when dollar is the centre of everything. Obviously sanctioned countries want their own system that can't be halted by any other entity. But that's easier said than done and i don't think they can make it work.

[be.open]

I agree with you, I don't know why everyone is going against the dollar and they just want the dollar to lose its value. Quitting of dollar doesn't makes sense because it's currently the internationally acceptable currency and can be used anywhere in the world without any issue. It's the most useful currency out there and without it I can't even imagine that how would they do trades. Their own fiat currencies can be used bilaterally but that currency won't be acceptable globally.

Because of the war and the sanctions? That's only reason needed. Plus Russia wants to destabilize west, it always has.

Countries that have sanctions want to trade and that won't be happening when dollar is the centre of everything. Obviously sanctioned countries want their own system that can't be halted by any other entity. But that's easier said than done and i don't think they can make it work.

After the imposition of the sanction, India began to buy a lot of oil from Russia and there was a strong imbalance in the trade balance. Under such conditions, interaction within the framework of a bilateral swap of national currencies has ceased to suit Russia, it simply does not need so many Indian rupees, and it also does not want to strengthen its ruble (for obvious reasons, for every export-oriented country). One possible solution is to increase the import of Indian goods to Russia in order to even out the imbalance in the trade balance. There are other options, such as gold. Judging by Bloomberg's weekly statistics, the supply of Russian oil to India has not stopped, which means that the parties have found a way to negotiate with each other.

[slapper]

Ah, another economic masterstroke ignoring trade's fundamentals. Why not print wads of cash, hoping to fix everything? Zimbabwe and Weimar Germany loved it, right? Don't forget propaganda's magic, convincing folks our funny money is gold. Celeb endorsements, a catchy tune - it'll be huge! But really, who'd use a currency that's trash outside its borders? Like buying groceries with Monopoly bucks - it might fly in your fantasyland, but reality? Not a chance.

[DrBeer]

I agree with you, I don't know why everyone is going against the dollar and they just want the dollar to lose its value. Quitting of dollar doesn't makes sense because it's currently the internationally acceptable currency and can be used anywhere in the world without any issue. It's the most useful currency out there and without it I can't even imagine that how would they do trades. Their own fiat currencies can be used bilaterally but that currency won't be acceptable globally.

Because of the war and the sanctions? That's only reason needed. Plus Russia wants to destabilize west, it always has.

Countries that have sanctions want to trade and that won't be happening when dollar is the centre of everything. Obviously sanctioned countries want their own system that can't be halted by any other entity. But that's easier said than done and i don't think they can make it work.

Wow! Finally, someone dared to name the true reason for all these squeals "it is necessary to abandon the dollar"! Here it is the main reason - the inability for rogue countries to exist in the civilized world, and play by the accepted rules! That's the whole point of stuffing about the dollar, or rather its "weakness", lately
But the joke is that a group of "helping the sufferers of sanctions" has also formed, which, under the guise of help, actually uses the situation to its advantage - for example, to buy a lot of cheap oil from Russia, selling them, for example, Indian rupees for oil, banning them change to dollars! In the people it is called "to breed a sucker"!
But here is another nuance - Russia will be "used" and thrown into the dustbin of history. But what will happen to those who, on a wave of hysteria, abandoned the dollar and transferred their entire external economy to the yuan? These countries are really pitiful ....

[Yanalli]

I think it is impossible to completely abandon the dollar, similarly, it is impossible to replace the international English language-everyone uses it, on every jar of sweet water translated by this language. Of course, they can reduce the impact, but they can only really be seen in the distant future.