Global economic dynamics are changing, and the hegemony of the US dollar appears to be wavering. Two influential members of the BRICS alliance, Russia and Iran, have just announced a major change: the complete abandonment of the dollar for their trade. While this decision reflects a desire for economic sovereignty in the face of external pressures, it could also open the way to a profound upheaval of international financial balances.
A partnership strengthened by dedollarization
Russia and Iran, hit by heavy international economic sanctions, have consolidated their cooperation through the exclusion of the American dollar from their trade. “We reached a monetary agreement with Russia and completely abolished the dollar. Now we only use the ruble and the rial,” noted Mohammad Reza Farzin, governor of the Iranian Central Bank. This initiative marks a notable acceleration in 2024, where 96% of transactions between the two countries are carried out in local currencies, an increase of 12.4% compared to the previous year.
Additionally, Russia has integrated Iran's Mir payment system, allowing Iranian citizens to access their funds directly through ATMs in Russia. This system was designed to replace the SWIFT network, largely controlled by the United States, and offer a sustainable alternative to the restrictions imposed by Washington.
A global strategy and its international implications
Such a bilateral partnership is part of a broader dedollarization strategy promoted by the BRICS group. While Western sanctions aimed to economically isolate Russia, the Kremlin has stepped up its efforts to convince other nations to abandon the dollar in favor of local currencies. This trend, already followed by several emerging economies, could amplify the loss of influence of the dollar on world markets.
The implications of this development go beyond BRICS. A decline in global demand for the dollar risks disrupting traditional supply and demand mechanisms, which could increase inflationary pressures in the United States. For emerging countries, this initiative offers an opportunity to reduce their dependence on fluctuations in the greenback and economic sanctions.
Finally, this movement could initiate a new era of international financial relations, where regional systems and bilateral exchanges in local currencies would gradually replace structures dominated by the dollar. This strategy could well inspire other countries to explore monetary alternatives, which would thereby redefine the global economic landscape.
Ultimately, the decision of Russia and Iran to definitively turn their backs on the American dollar illustrates a desire for autonomy in the face of geopolitical challenges. While the move represents a symbolic victory for BRICS, it could also raise new questions about the future of global trade and the role of sovereign currencies in a rapidly changing financial system.
Maximize your Tremplin.io experience with our 'Read to Earn' program! For every article you read, earn points and access exclusive rewards. Sign up now and start earning benefits.
