Monday, 21 Sep, 2026
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A wider use of the rupee can reduce foreign-exchange costs and ease some dependence on the dollar. But it cannot replace the dollar where it matters most: paying for major imports and doing business in global markets
The US dollar remains the world’s dominant reserve currency, and the latest push by BRICS to reduce dependence on it is unlikely to change that position anytime soon. The more credible challenge comes not from BRICS but from the euro.
The 18th BRICS Summit in New Delhi on September 12-13 is focusing on common alternative cross-border payment mechanisms and greater use of local currencies in trade settlement. The objective is clear: reduce members’ dependence on the dollar. But the scale of BRICS trade is still too small, relative to the global economy, to threaten the dollar’s international role.
Intra-BRICS exports have nearly quadrupled, from $335 billion in 2009 to $1,197 billion in 2025. Even if all this trade were settled in local currencies, it would have accounted for only 4.59 per cent of global merchandise trade last year. That is hardly enough to challenge the dollar’s dominance.
The more important measure is the currency in which countries hold their official foreign exchange reserves. The dollar’s share has declined steadily, from 64.68 per cent in 2016 to 56.42 per cent in 2025. Yet more than half of the world’s official reserves are still held in dollars.
The euro, by comparison, accounted for 20.38 per cent in 2025, up from 19.80 per cent in 2016. The yen’s share also rose over the period, from 3.98 per cent to 5.84 per cent. Sterling increased from 4.74 per cent to 5.84 per cent.
The renminbi, despite China’s economic weight and Beijing’s efforts to promote its international use, remains a much smaller player. Its share was 1.95 per cent in 2025, down from 2.85 per cent in 2021. The currency was included in the IMF reserve data only from 2016.
Trade invoicing presents a somewhat different picture. The dollar and euro together dominate global export invoicing, underlining the importance of established currencies in international commerce. The euro therefore poses a more substantial challenge to the dollar’s role in trade than the currencies of BRICS members do.
The gap is even clearer in foreign exchange markets. The dollar remains by far the most widely traded currency. In March 2026, it appeared on one side of 89 per cent of all foreign exchange transactions, compared with 30 per cent for the euro, 12 per cent for the pound, 10 per cent for the yen and 4 per cent for the renminbi. The figures add up to 200 per cent because every foreign exchange transaction involves two currencies.
This is where the argument about de-dollarisation often becomes overstated. A currency does not become a global reserve or trading currency simply because countries agree to settle more bilateral trade in their own currencies. It needs deep and liquid financial markets, widespread acceptance, reliable institutions and an ample supply of safe assets in which foreign investors can park their money.
BRICS can make progress on local-currency settlement, particularly among members that already trade heavily with one another. It can also develop alternative payment arrangements that reduce the need for dollars in individual transactions. But bypassing the dollar in some transactions is very different from replacing it at the centre of the international monetary system.
The growth of intra-BRICS trade is nevertheless significant. Exports within the group have risen sharply since the first BRICS summit in 2009, and the bloc now accounts for a larger share of world commerce. But even this expanding trade remains only a fraction of global merchandise exports.
For India, the distinction matters. Greater use of the rupee in trade can reduce foreign-exchange costs and, in some circumstances, exposure to dollar shortages. But it does not remove the need for dollars when India pays for major imports or when companies and investors operate in global markets.
Nor does the rise of BRICS automatically create a common alternative currency. The group contains economies with very different financial systems, exchange-rate regimes and economic interests. Increasing local-currency settlement is considerably easier than creating a currency capable of performing the dollar’s multiple global functions.
The dollar’s declining share of official reserves is therefore a trend to watch, but not evidence of imminent displacement. Its share has fallen by more than eight percentage points since 2016, yet it remains nearly three times the euro’s share of global reserves.
The euro has the stronger claim to be the dollar’s principal alternative. It already has a substantial reserve role, a large economic base and deep financial markets. BRICS may gradually reduce the dollar’s use at the margins. But dethroning it is a much larger task.
The evidence so far points to diversification rather than revolution. The dollar is losing some ground, but BRICS is still a distant challenger. The euro is the currency that matters more in judging how far the dollar’s dominance may eventually erode.
