BRICS member India is most likely dumping millions of US dollar from its reserves to keep the rupee from falling. The Indian rupee touched a low of 84.13 on Tuesday, and the development is worrying the Reserve Bank of India (RBI).
Reuters reported that the RBI is likely selling the US dollar worth millions in the currency markets to stop the rupee’s fall. Not just India, several BRICS countries have been accused of selling the US dollars to keep their local currency from falling.
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Sources close to the development said on the condition of anonymity that India’s central bank does not want the rupee to fall below 84.15. A trader from a private bank said, “It’s quite unlikely” that RBI will allow the rupee to dip below 84.15. BRICS countries have been previously accused of interfering in the currency markets to prevent the US dollar from rising against the local currencies.
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BRICS: US Dollar Rising Is a Nightmare For India and the Rupee
Source: Reuters / ShutterStock
A stronger USD is a nightmare for BRICS as their native economies could be drastically impacted. Import and export services will be the first hit if the US dollar flexes its muscles in the markets. India’s export and import sector will take a beating if the rupee depreciates further against the USD.
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In addition, a rising USD is the antithesis of BRICS as the alliance is pushing the de-dollarization agenda. A stronger US dollar will make the initiative weaker and the bloc aims to keep the de-dollarization process steady.
Read here to know how many sectors in the US will be affected if BRICS ditches the dollar for trade. The alliance is doing everything possible to ensure local currencies are ahead of the US dollar. This pressurizes other countries to follow suit and de-dollarize their economies for survival.
