BRICS vs The Dollar: A Currency Tug of War

Former RBI Governor Duvvuri Subbarao discusses Donald Trump's threat to impose 100% tariffs on BRICS nations if they opt out of using the US dollar. Internal divisions within BRICS and the complex politics and economics of adopting a common currency hinder progress.

In a bold declaration, President-elect Donald Trump has warned that BRICS countries may face hefty tariffs if they disengage from the US dollar, though it remains uncertain how this will be implemented. Former RBI Governor Duvvuri Subbarao expressed skepticism, noting that American law may not support such sanctions.

BRICS, consisting of India, Russia, China, Brazil, and other key nations, faces internal conflicts regarding the replacement of the US dollar. While some members, notably Russia and China, have shown interest in a collective currency, political and economic challenges impede this vision.

An alternative currency could potentially protect BRICS from the dominance of the dollar, but Subbarao notes it's impractical due to political reluctance, especially from India, which is hesitant to sacrifice monetary autonomy. The endeavor's potential failure hinges on the unwillingness to embrace shared fiscal risks.

(With inputs from agencies.)