The Government of the Maldives confirmed that BRICS members India and China have agreed to accept local currencies for imports and abandon the US dollar. Cross-border transactions in local currencies benefit developing countries and strengthen their own economies.
The Maldives said India and China will cooperate in facilitating payments for imports in local currencies, sidelining the US dollar. The new import trade agreement between the three countries is in line with the BRICS idea of de-dollarization. Read here to know how many sectors in the US will be affected if the BRICS dumps the dollar for trade.
Also read: Three ways the BRICS currency will impact the US dollar
BRICS: Imports between India, China and Maldives must be handled in local currency, not US dollars
Maldives Minister of Economic Development Mohamed Saeed confirmed the development that local currencies will be used for import trade. Both India and China will accept or pay for 50% of all local currency imports from the Maldives. Therefore, Maldives' new $1.5 billion import law will see BRICS members India and China settle 50% in local currency.
Also read: 10 ASEAN Countries That Should Abolish the US Dollar
That makes it worth about $750 million in cross-border transactions in local currency and not in the US dollar. The Maldives imports $720 billion worth of goods from China and also imports another $780 billion a year from India. Half of these transactions will soon be paid in local currency, ending dependence on the US dollar.
“If we can arrange up to $300 million from each (BRICS) country, that means $700 million. This means that in the future we can eliminate dependence on US dollars by that amount. That will reduce the demand for dollars. And future demand for dollars will continue to decline.” Saeed said.
Also read: BRICS will pay $4,000,000,000 in local currency, in addition to the US dollar
“The Maldives imports between $600 and $700 million worth of raw materials every year from both (BRICS members) India and China. That's why we import approximately $1.4 billion to $1.5 billion worth of raw materials annually, from both markets combined.” Saeed said.