FX.co ★ Indian rupee to rival USD?

The dream of shifting away from the US dollar is still strong as now and then, new candidates appear to challenge its dominance. This time, WirtschaftsWoche, a German business magazine, made a surprising prediction about the Indian rupee, suggesting that it is poised to compete with the US dollar for international currency status. A very bold prediction indeed, given that the rupee is a partially convertible currency with low trading volumes not only in global trade but even in the Asia-Pacific region. The author of the article believes that the Indian currency is capable of substituting for the US dollar on a regional scale. The main driver behind such a twist is the sanctions policy of the US against such countries as Russia and Iran. Sanctions are believed to be harmful to the American economy as they push the rest of the world to abandon the US dollar. Yet, this assumption contradicts reality. For instance, the greenback has recently set a record volume in international settlements. Within the SWIFT system alone, the share of the US currency jumped to 46.5% in July from 39.4% in June. Just a decade ago, before the so-called de-dollarization, it made up only about a third of the total volume of settlements. According to WirtschaftsWoche's experts, tough economic sanctions imposed on countries like Russia and Iran have made many world leaders ponder the risks of transacting in the US currency as funds can be frozen at any time. Hence, there is a growing shift towards other currencies.