The multipolar concept has truly taken the vertical currency by storm in recent times, as countries are now stepping up their efforts to take local currency narratives to the next level. In one such effort, China and India have jointly decided to ditch the use of US dollars and prefer to adopt a local currency approach to conduct trade procedures with the Maldives.
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India and China leave the USD behind again: what happens?
The Maldives, in a rack which was shared on Wednesday, outlined that India and China have agreed to conduct their trade procedures with the nation in local currencies instead of the US dollar. This roughly means that countries will not use the USD to advance their trading activities in a new sentiment shift.
Explaining the main reasoning behind this shift, the Maldives reiterated how by trading in local cents, the country will save almost 50% of its $1.5 billion annual import bill levied by the two countries.
Moreover, Maldives Minister of Economic Development Mohamed Saeed later shared that he had met with Indian High Commissioner Munu Mahawar in New Delhi. The meeting was held mainly to discuss payment settlement techniques in local currencies, which meant a shift away from the US dollar.
This is not the first time that countries have decided to promote local currency trading internationally. India has adopted a local currency policy for trade with Nepal and Bhutan. Similarly, Russia and China have also started using the ruble and the Chinese yuan to conduct primary commercial trade, ditching the US dollar in the process.
The future of the US dollar
While analysts At Morgan Stanley, the US dollar's dominance continues, but the US currency has certainly borne the brunt of the recent currency shift to some extent. As countries explore alternatives to the U.S. dollar, the U.S. could experience volatility in the currency index along with grim economic conditions spiraling out of control.
As U.S. debt levels continue to rise at a deadly pace, the country currently stands on a dangerous precipice that could drastically hinder economic progress.
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According to Yahoo FinancesThe debt “would slow economic growth, increase interest payments to foreign holders of U.S. debt and pose significant risks to the fiscal and economic outlook; it could also make lawmakers feel more constrained in their policy choices.”