It'll be interesting to see if, and to what extent, they can act in concert in the long term. It's not currently clear to me whether they stand for the same principles or share a common set of values (apart from apparently opposing a Western-centric uni-polar world order).
It could be that, by doubling in size, they're actually hindering themselves by "adding more cooks to the kitchen".
There is so much discourse around the fall of the dollar, but in reality, the reserve status of the dollar is a huge gift from the US to the rest of the world.
It’s not free or easy to maintain the stability (and therefore the attractiveness) of the dollar. It costs the US a lot to do so, and it’s not clear what it gets in return anymore. For example, the option of growing exports by weakening the dollar (or more likely, the dollar weakening naturally due to a trade deficit) simply doesn’t exist for the U.S. because it runs counter to maintaining the stability of the dollar.
Essentially, the US has to rely on expensive fiscal policy and trade barriers to grow exports and a domestic production base instead of the much easier monetary policy.
But more generally, US monetary policy is highly driven by global needs more so than national needs. And the USD’s reserve status is a large part of that.
The traditional benefit for the US was always cheaper oil. But considering the U.S. is the largest producer of fossil fuels today, and further, all countries need to reduce their reliance on fossil fuels, this is a benefit that will become increasingly less relevant over the upcoming decades.
If the U.S. is lucky some other country will pick up the slack it’s been picking up all this while.
And buying oil in INR makes a lot of sense for the UAE because so much of its labor costs is paid to Indians. It would be far more efficient to just pay them in INR going forward.
That being said, it remains to be seen how successful the currency of a country which has depreciated significantly over the past decade+ against the dollar, and further, has been subject to multiple rounds of “demonetization” and other capricious govt policies, will be as an alternative reserve currency.
Unlike Russia, India and UAE have strong economic ties. Considering the Emirates imported ~30 Billion dollars worth of goods from India last year, it's quite clear what they can use the rupees for.
If your currency is not universal, then you have to produce stuff that people wants. India may not necessarily export enough to Russia for them to justify holding so much rupees.
UAE may actually be a decent fit because of the Indian labor it imports.
A lot of Dirhams are converted to Rupees as laborers send the money back to India, so this could help reduce costs for the workers, companies and the UAE.
If that’s indeed their strategy, and it appears it is, it’s great for the US since it means there are fewer countries it needs to subsidize by maintaining the strength of the dollar.
And the countries that do stick to the USD enjoy an implicit cost advantage over the countries that don’t because they don’t have to bear the inefficiency costs of holding wealth in highly unstable currencies that are hard to convert.
https://www.lemonde.fr/en/international/article/2023/08/24/i...
Especially with Iran joining it's starting to look very anti-Western.