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Bilateral Trade Deals: Russia and India, for example, are settling oil purchases in rupees and rubles, bypassing the dollar entirely. Developing Infrastructure: The Brics countries are exploring how they can foster greater use of local currencies in their trade, instead of relying on a handful of major currencies, primarily the US India signed an agreement for trading in local currencies with the UAE in July 2025 and with Malaysia in April 2025. Later the same year, the Indian government declared it Amid the recent BRICS expansion and the bloc’s de-dollarization approach, the US and Europe may soon require local currencies in order to buy oil. Indeed, the past several months have Amid the recent BRICS expansion and the bloc’s de-dollarization approach, the US and Europe may soon require local currencies in order to buy oil. Indeed, the past If BRICS starts using their local currencies for transactions, it could decrease the demand for the US dollar and lead to its depreciation against other local currencies. This BRICS nations, particularly China and India, have offered Russia a lifeline by purchasing its crude oil at reduced rates. By opting to transact in local currencies, these European financial institutions are receiving requests for transactions, including hedges, that bypass the US dollar. These requests involve the direct use of local

BRICS, US, and Europe: The Looming Shift to Local Currencies for Oil Purchases

Amid the recent BRICS expansion and the bloc’s de-dollarization approach, the US and Europe may soon require local currencies in order to buy oil. Indeed, the past several months have seen a significant acceleration in moves away from the traditional dominance of the US dollar in international trade, particularly in the energy sector.

The increasing use of local currencies for oil transactions is driven by several factors, most notably the BRICS nations' collective ambition to reduce reliance on the dollar. This is fueled by concerns about US foreign policy and the potential weaponization of the dollar in international relations. If BRICS starts using their local currencies for transactions, it could decrease the demand for the US dollar and lead to its depreciation against other local currencies.

Key Developments Driving the Change

Several key developments underscore this shift. Bilateral Trade Deals: Russia and India, for example, are settling oil purchases in rupees and rubles, bypassing the dollar entirely. This trend is gaining momentum as more countries seek alternative payment mechanisms.

Furthermore, Developing Infrastructure: The Brics countries are exploring how they can foster greater use of local currencies in their trade, instead of relying on a handful of major currencies, primarily the US. This includes establishing common payment systems and promoting the convertibility of their currencies.

India's Pioneering Role in Local Currency Trade

India is at the forefront of this movement, actively pursuing trade agreements that facilitate the use of local currencies. India signed an agreement for trading in local currencies with the UAE in July 2025 and with Malaysia in April 2025. Later the same year, the Indian government declared it a priority to expand such arrangements with other trading partners. These agreements significantly reduce transaction costs and currency exchange risks for Indian businesses.

Russia's Energy Lifeline and European Implications

BRICS nations, particularly China and India, have offered Russia a lifeline by purchasing its crude oil at reduced rates. This has enabled Russia to maintain its oil exports despite Western sanctions, further solidifying the use of alternative currencies in international energy trade. By opting to transact in local currencies, these European financial institutions are receiving requests for transactions, including hedges, that bypass the US dollar. These requests involve the direct use of local currencies, indicating a growing demand for euro-ruble or euro-rupee settlements.

The Future of Oil Trade: A Multipolar Currency World?

The rise of local currency transactions in the oil market signals a potential shift towards a multipolar currency world. While the US dollar remains the dominant currency in global trade, its influence may gradually diminish as more countries embrace alternative payment systems. This trend could have significant implications for the US and Europe, requiring them to adapt to a new landscape where the dollar's hegemony is no longer guaranteed.

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