India has signed an agreement with the United Arab Emirates that will allow it to settle trade in rupees instead of dollars, boosting India's efforts to cut transaction costs by eliminating dollar conversions. During a visit by India's Prime Minister Narendra Modi to the UAE on Saturday, the two countries also agreed to set up a real-time payment link to facilitate easier cross-border money transfers. The two agreements will enable "seamless cross-border transactions and payments, and foster greater economic cooperation", said a statement from the Reserve Bank of India on Saturday.
  • queermunist she/her@lemmy.mlEnglish
    43·
    1 year ago

    Ironically, the efforts to fight inflation are actually driving dedollarization by making it more painful to borrow dollars.

    Then, because global demand for dollars falls due to dedollarization, inflation necessitates continued tight monetary policy.

    Not looking good for the US.

    • ☆ Yσɠƚԋσʂ ☆@lemmy.mlOPEnglish
      22·
      1 year ago

      Yeah, it’s fascinating to watch the feedback loops nobody anticipated come into play. The speed at which the world is dedollariziing is absolutely astonishing. And I expect that dedollarization will continue to become easier the more countries do it because all the networks for alternative trade will be in place making it easier for other countries to follow suit.

      • queermunist she/her@lemmy.mlEnglish
        23·
        1 year ago

        Inflation, surprisingly, has slowed down recently. I definitely expected it to continue at an elevated rate forever as dedollarization accelerated. It might just be a false plateau before something else causes inflation to spike again, but if not then this hypothesis (dedollarization is driving inflation) might not be sound.

        • ☆ Yσɠƚԋσʂ ☆@lemmy.mlOPEnglish
          33·
          1 year ago

          I think part of it could be US cannibalizing Europe right now by luring away industry which is creating a short term economic boost we’re seeing.

          • queermunist she/her@lemmy.mlEnglish
            33·
            1 year ago

            Possibly! Which, in turn, would weaken the USs positive relationships with those countries as they’re pressured on multiple fronts (losses from trade competition, fallout from the Russian conflict, growing unrest from within the country) and thus accelerate dedollarization and then inflation. That would take time, though, and require another point of rupture that I certainly can’t predict!