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The Maldives ditches dollar

The Maldives ditches dollar

The Maldives ditches dollar

The Maldives, known for its stunning oceans and luxurious vacations, has taken a significant step in its economic policies by announcing a complete cessation of the use of the US dollar in trade transactions. This decision reflects the changing dynamics of global trade, particularly for the Maldives, whose trade activities are predominantly with China and India. Both countries are actively promoting the use of their respective currencies in international transactions, aligning with their broader economic strategies. This move by the Maldives signifies a shift towards strengthening trade relations with these Asian giants, further diversifying its economic engagements away from traditional reliance on the US dollar.

Maldives to permanently ditch US dollar for trade settlements

This island nation, a hotspot for tourists, is not just about sun, sea, and sand anymore, guys. Right now, it is on the verge of making an economic decision that could significantly alter the global economy as we know it. So get this. Every year, the Maldives sends a cool $780 million to India for imports. Instead of paying in dollars, they’re now in talks to use their own money, the Maldivian Rufiyaa. It’s a game-changer for trade dynamics and a potential financial headache for the US dollar’s dominance in global markets.

This isn’t a spontaneous decision. The groundwork was laid back in 2023 when India green-lit special Vostro bank accounts in the Maldives. The Reserve Bank of India (RBI) has been promoting the Indian Rupee in bilateral agreements, suggesting a mutual comfort in moving away from the dollar. Moreover, the BRICS 2024 summit, set for October in Russia’s Kazan region, is expected to champion this ‘de-dollarization’. With new members like the UAE, Egypt, Iran, and Ethiopia potentially joining, and even Saudi Arabia if they agree, the summit is poised to be a major event in global economics. Sergey Ryabkov, Russian Deputy Foreign Minister, hinted at “historic milestones,” emphasizing a stronger alliance pushing towards a multi-polar world where reliance on the US dollar diminishes.

The Global Economy and BRICS’ Expansion

While G7 countries are experiencing mixed fortunes, BRICS nations like Saudi Arabia, the UAE, and South Africa are looking at higher growth rates than the previous year. In contrast, powerhouse economies like China and India are seeing a slight dip compared to their previous growth figures, with China growing 0.6 percentage points slower and India by a full percentage point. Despite these variances, BRICS countries, with their combined GDP notably lower than the G7’s but growing at a faster rate, are poised to possibly overtake the G7 in economic size within the next couple of decades. The expansion of BRICS has seen its challenges. Argentina turned down an invitation to join in late December, while Saudi Arabia remains on the fence. However, South Africa’s Foreign Minister, Naledi Pandor, noted that 34 countries have shown interest in joining BRICS, which indicates a growing influence and appeal of the bloc on the global stage.

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