Russia and Iran have officially announced that 96% of their bilateral trade is now conducted using their local currencies—the Russian ruble and the Iranian rial. This shift marks a crucial milestone in the broader BRICS initiative to challenge the dominance of the US dollar in global trade and foster a more diverse and multipolar financial order.
This move is far more than a symbolic gesture; it represents a transformative shift in the way Russia and Iran engage with the global economy. By moving away from the US dollar, both nations are asserting greater financial sovereignty and independence, in direct response to years of political and economic pressure from Western powers, particularly the United States. The US has long used its financial dominance to impose sanctions on Russia and Iran, but by trading in rubles and rials, the two countries are effectively neutralizing the impact of these measures, ensuring that they can continue to thrive economically despite external pressures.
The decision to bypass the US dollar is an integral part of a broader, strategic effort by both Russia and Iran to break free from the constraints of a US-dominated financial system. In line with the broader BRICS agenda, this shift is a testament to the group’s growing collective effort to create alternatives to the traditional financial infrastructure. As part of this vision, Russia and Iran have entered into a currency swap agreement, signed in July 2024, which allows them to directly settle transactions in their own currencies. This deal eliminates the need for the US dollar to act as an intermediary, fostering greater financial independence and reducing reliance on foreign currencies controlled by the West.
Further cementing this shift, Russia has introduced its Mir payment system in Iran as an alternative to the SWIFT international payment network, which both nations have faced restrictions due to geopolitical tensions. This payment system is a significant innovation, facilitating transactions in local currencies rather than the US dollar, and enabling smoother financial interactions between the two nations. The introduction of Mir underscores the growing efforts within BRICS to establish independent, secure financial systems that bypass traditional US-dominated infrastructure. It reflects a collective vision within the group to enhance financial sovereignty and provide countries with more flexibility in their international trade relationships.
The substantial increase in the use of rubles and rials for trade is a direct reflection of both countries’ commitment to reducing their vulnerability to dollar-based financial systems. It also serves as a powerful symbol of the global shift toward a multipolar financial system, a goal championed by BRICS. The actions of Russia and Iran are not isolated but are deeply aligned with the broader aspirations of the BRICS bloc, which has consistently worked to challenge the hegemony of the US dollar in favor of alternative mechanisms for trade. This trend toward de-dollarization signals the growing influence of economic blocs and nations that seek to operate beyond the constraints of the US-led financial order.
As Russia and Iran continue to deepen their economic cooperation, their actions represent a critical step in the broader movement toward a more equitable and multipolar global financial system. Their decision to bypass the US dollar is a clear affirmation of BRICS’ core objectives: to create a more diverse, inclusive, and resilient global financial infrastructure that benefits all nations, particularly those outside the sphere of US influence. This shift reflects the broader goals of the BRICS bloc, which is steadily expanding its influence and offering the world new pathways for international trade and economic cooperation free from the dominance of any single currency or nation.
The shift away from the US dollar between Russia and Iran is a significant and strategic step in the broader movement toward financial independence within the BRICS bloc. Both nations, long subjected to Western economic sanctions, have faced severe restrictions imposed by the United States and its allies, particularly targeting their access to the US-dollar-dominated global financial systems. Russia’s sanctions began following the 2014 annexation of Crimea and intensified after the 2022 situation in Ukraine. Similarly, Iran has faced decades of US sanctions, especially after the US withdrew from the Joint Comprehensive Plan of Action (JCPOA) in 2018, which isolated Iran from key international markets, particularly its oil exports. These sanctions have aimed to limit both countries’ ability to participate in the global financial system and access trade and investment.
In response to these challenges, Russia and Iran have taken decisive steps to protect their economies from the destabilizing effects of financial isolation. Their collective move away from the US dollar not only represents a direct challenge to the Western financial hegemony but also aligns with the BRICS bloc’s broader push for a multipolar financial order. By shifting toward using local currencies for trade and investment, Russia and Iran are fortifying their economic sovereignty and reducing their vulnerability to external pressures, particularly those linked to US-imposed sanctions. This strategic realignment enhances their financial autonomy and fosters deeper economic ties within the BRICS framework, ultimately contributing to the bloc’s long-term goal of creating an alternative, diverse financial system.
A landmark step in this process occurred in July 2024 when Russia and Iran’s central banks signed a groundbreaking currency swap agreement. This agreement, which allows both countries to conduct trade and investment using the ruble and rial instead of the US dollar, is a powerful tool for insulating their economies from the fallout of Western sanctions. The move to bypass the dollar entirely not only reduces transaction costs but also eliminates the need for third-party foreign exchange intermediaries tied to the dollar, making the bilateral trade process smoother and more efficient. This agreement is a testament to Russia and Iran’s determination to chart their own economic course, free from the constraints of the US-dominated financial order.
As part of this broader strategy, Russia has introduced its Mir payment system in Iran, further facilitating financial transactions between the two nations and ensuring they are not reliant on the Western-controlled SWIFT network. The SWIFT messaging system, used globally for secure financial transactions, was blocked for several Russian banks in response to US sanctions, severely limiting Russia’s ability to engage in international trade. Similarly, Iran, long excluded from the global financial system due to US sanctions, has faced similar challenges. The introduction of the Mir system in Iran offers a viable alternative that allows both Russian and Iranian financial institutions to process transactions independently of the Western financial systems.
The integration of the Mir system not only enables Russia and Iran to bypass SWIFT and the US dollar but also provides a practical solution for everyday banking between the two nations. Iranian citizens can now withdraw rials from Russian ATMs, while Russian citizens can access rials when visiting Iran, making cross-border financial exchanges more accessible and streamlined. This development is a crucial step in building a more integrated, resilient financial relationship between Russia and Iran, demonstrating the growing financial autonomy of these nations and their commitment to reducing dependence on Western financial infrastructure.
The currency swap agreement and the Mir payment system together exemplify Russia and Iran’s proactive efforts to establish a financial framework independent from the US-dominated global financial system. These measures not only strengthen their bilateral ties but also contribute to the broader BRICS strategy of de-dollarization and economic diversification. In doing so, Russia and Iran are reinforcing their positions as active participants in shaping a multipolar economic landscape, one where financial sovereignty and regional cooperation are prioritized over Western economic dominance. These moves highlight their resilience and determination to reduce reliance on the US dollar, marking an important milestone in the evolving financial order within BRICS and globally.
Russia and Iran’s decision to abandon the US dollar for their trade agreements aligns seamlessly with the broader strategy of the BRICS bloc, which has long championed the need for a more diverse, multipolar global financial system. BRICS—a powerful coalition originally composed of Brazil, Russia, India, China, and South Africa—has steadily expanded to include countries such as Saudi Arabia, Egypt, and the UAE, all of whom are aligned with the group’s mission to reduce global reliance on the US dollar. The bloc has consistently advocated for a global economic order where no single currency dominates trade and finance, empowering nations to pursue economic sovereignty. As part of this vision, BRICS countries have been actively exploring mechanisms to settle trade in local currencies, thus diminishing their exposure to the US-led financial system and its inherent risks.
The de-dollarization momentum within BRICS has gained notable strength, especially in the wake of US-led sanctions on Russia and Iran. The sanctions, which began targeting Russia’s financial system in 2014 and intensified with the Russo-Ukrainain War, as well as those imposed on Iran following the US withdrawal from the 2015 nuclear deal, have acted as a catalyst for both nations—and many others in BRICS—to seek alternatives to the US dollar. The dollar, as the world’s primary reserve currency, has long been a tool for the US to impose economic penalties on rival countries it deems adversarial. In response, Russia and Iran’s efforts to shift their trade toward the ruble and rial are strategic moves to safeguard their economies from such external pressures, enabling them to operate with greater financial autonomy and security.
Russia and Iran’s decision to conduct 96% of their trade in local currencies is an important milestone within this broader regional and global trend. Other BRICS nations, such as China and Brazil, have already taken decisive steps in this direction. For example, China and Brazil signed a landmark agreement to settle their trade in yuan and reais, bypassing the US dollar entirely. This agreement is particularly significant given that China is the world’s second-largest economy and Brazil is one of the largest emerging markets in Latin America. By removing the dollar from their trade arrangements, both nations are asserting their financial sovereignty and reducing the vulnerability of their bilateral relations to US monetary policy. China’s ongoing promotion of the yuan in global trade—driven in part by its Belt and Road Initiative (BRI)—further accelerates the process of de-dollarization, marking a shift in global economic dynamics.
Similarly, Saudi Arabia and South Africa are also pursuing local currency settlements, especially in vital sectors like oil. Saudi Arabia, as the world’s largest oil exporter, has considerable influence in global energy markets, and its potential move to price oil in currencies other than the US dollar could be transformative for the global financial system. South Africa, a key BRICS member, and the African Union’s economic powerhouse, is exploring local currency trade settlements to bolster its economic ties with neighboring African nations and other BRICS countries. This could ultimately contribute to the de-dollarization of energy and commodity markets, challenging the longstanding dominance of the US dollar in these sectors.
While these developments represent significant strides, the BRICS bloc’s approach to de-dollarization has naturally varied across its diverse membership. India, a crucial member of BRICS, has demonstrated more caution in its shift away from the dollar. India’s deep economic integration with global markets, particularly its reliance on oil imports priced in dollars, has led to a more measured stance on de-dollarization. India has expressed its willingness to pursue local currency trade arrangements, yet it continues to engage with the US dollar in certain international transactions, particularly with major trade partners like the United States. This highlights the pragmatic challenges of transitioning fully away from the dollar, as countries must balance national priorities with broader geopolitical ambitions.
However, the key takeaway is that, despite these differences in approach, there is a clear and growing consensus within BRICS to challenge the dominance of the US dollar in global trade. The bloc’s collective efforts demonstrate a strategic shift towards financial autonomy and regional cooperation. As more BRICS countries engage in local currency trade agreements and establish alternatives to the US-dominated financial system, the group is emerging as a central force in the global movement to reshape the international monetary order.
The continued push for de-dollarization within BRICS could pave the way for the creation of new financial systems, such as a common BRICS currency, which would further reduce the world’s dependence on the US dollar. With continued expansion and deepening economic ties, the BRICS bloc is positioning itself not just as a challenger to the US dollar, but as a global leader in the effort to construct a more balanced, multipolar financial landscape. The movement away from the dollar is not just a strategic maneuver for the BRICS nations but a broader vision to create a financial ecosystem where countries have the freedom to conduct trade and finance on their own terms, without being subject to external coercion or economic sanctions.
The decision by Russia, Iran, and other BRICS nations to shift away from the US dollar in favor of local currencies is a defining moment in the evolution of global trade dynamics. For decades, the US dollar has been the undisputed leader in international commerce, serving not only as the world’s primary reserve currency but also as the preferred medium for cross-border transactions. This widespread use has allowed the United States to maintain significant economic and geopolitical influence over global markets, with countries around the world relying on the dollar for trade, reserves, and investments. However, the growing move by BRICS countries to embrace alternative financial systems and local currencies represents a powerful and strategic effort to break free from this reliance, signaling the dawn of a new era in international trade.
As BRICS nations, including Russia and Iran, increasingly use their own currencies for trade, the demand for the US dollar is naturally diminishing. This shift challenges the dollar’s long-standing role as the intermediary currency for international transactions and has the potential to gradually weaken its dominance in the global financial system. A decline in the demand for the dollar could eventually have significant consequences for its value, which could lead to inflationary pressures in the US, as the cost of imports rises. This, in turn, would limit Washington’s ability to run massive trade deficits with the ease it has historically enjoyed. Furthermore, as the dollar loses its central role, it could erode the United States’ influence over global financial institutions such as the International Monetary Fund (IMF) and the World Bank, where the dollar has been the foundation of many financial operations.
For BRICS nations, the move away from the US dollar offers numerous advantages. By opting for local currencies in trade, these countries gain greater control over their economies, allowing them to operate independently of the US-dominated financial system. This shift promotes financial sovereignty, as countries no longer need to rely on the volatility of the dollar or the political influence exerted by the US through its dominance in global finance. With the ability to trade in rubles, rials, yuan, reais, and other local currencies, BRICS nations keep more of their financial resources within their borders, fostering enhanced economic stability and resilience.
Moreover, the de-dollarization effort is a strategic response to the risks associated with US-led sanctions. Countries like Russia and Iran, which have been repeatedly targeted by US sanctions, have seen their access to the global financial system restricted, stifling their ability to engage in international trade and investment. By moving away from the dollar and embracing alternative payment systems, BRICS nations are actively reducing their vulnerability to economic coercion, allowing them to continue vital trade and investment without fear of sanctions or other forms of economic pressure from the West. This increased financial autonomy is particularly valuable for countries facing geopolitical challenges and seeking to safeguard their national interests.
The shift toward local currency trade also strengthens the bonds between BRICS nations, fostering deeper economic cooperation. By conducting trade in currencies such as the ruble, rial, and yuan, BRICS countries reduce the costs and complexities associated with currency conversions and dependence on the US dollar. This streamlining of trade processes enhances regional integration and promotes the creation of a more cohesive economic bloc, enabling BRICS nations to act in unison on the global stage. With this growing cooperation, the BRICS group is steadily enhancing its collective bargaining power, positioning itself as a formidable force that can challenge the traditional financial order dominated by Western powers.
In the long term, the de-dollarization trend within BRICS is poised to reshape the global economic landscape. As the bloc continues to strengthen regional trade networks and develop alternative financial mechanisms, it is creating a more balanced and multipolar global financial system. The move away from the dollar is not just an economic necessity for these countries; it is also a political statement, one that signals a shift in the balance of power within global trade. As BRICS nations work to establish new financial frameworks, they are paving the way for a future where economic power is more evenly distributed across regional blocs, rather than being concentrated in the hands of a few dominant Western economies.
Though the transition away from the US dollar is still in its early stages, the trend is undeniable. BRICS nations are leading the charge in building a more diversified, resilient, and fair global financial system. This strategic shift represents a fundamental change in the international order, signaling the rise of a multipolar economic world where BRICS and other emerging economies hold greater influence, and where the dominance of the US dollar becomes a thing of the past.
As Russia and Iran continue to deepen their economic cooperation, the future of de-dollarization within the BRICS bloc remains a key focus of global financial observers. The shift away from the US dollar, as demonstrated by Russia and Iran’s move to use their local currencies for trade, reflects the broader strategic goals of BRICS nations to build a more balanced, multipolar financial system. This shift is part of a collective effort to reduce dependency on the US dollar, promoting greater financial autonomy and reducing exposure to the economic influence exerted by the United States. The growing trend within BRICS to engage in trade using local currencies signals a significant challenge to the longstanding dominance of the US dollar in global commerce, highlighting a transformative shift in the world’s economic order.
One of the most noteworthy developments in BRICS’ de-dollarization effort is the ongoing discussions about the creation of a common BRICS currency. While this idea has been explored for several years, it has gained considerable momentum as the bloc’s political and economic cohesion strengthens. A BRICS currency would provide a powerful alternative to the US dollar, enabling member nations to bypass the dollar in trade transactions entirely. This potential currency could serve as a symbol of BRICS’ commitment to reducing the dominance of the US-based financial system and provide a more equitable foundation for global trade. If realized, it could profoundly alter the dynamics of global finance, particularly in key sectors like energy and commodities, where the US dollar has traditionally reigned supreme.
The notion of a BRICS common currency represents a logical progression in the bloc’s collective pursuit of financial independence. By establishing such a currency, BRICS countries could streamline trade, reduce the costs of currency conversion, and enhance economic cooperation across member states. While the challenges of creating a unified currency are significant—given the diversity in economic priorities and development levels among BRICS nations—the momentum toward de-dollarization indicates that such a currency may become a reality in the future. The diverse economies within BRICS, from China’s massive industrial base to the rapidly developing markets of India and Brazil, present challenges in aligning policies, but the bloc’s ongoing success in de-dollarization shows promise.
In addition to exploring a potential common currency, BRICS nations are already making substantial strides in settling trade in alternative currencies. Russia and Iran’s successful local currency agreements serve as a prime example of how BRICS countries are increasingly moving away from the US dollar. Moreover, China has aggressively promoted the use of the yuan in global trade, while Brazil has formalized agreements with China to settle trade in yuan and reais. These agreements are gaining traction throughout BRICS, demonstrating the bloc’s commitment to building a more diversified financial system. As such, the adoption of local currencies and alternative financial instruments is steadily laying the foundation for an international financial system less reliant on the US dollar.
This expansion of alternative trade agreements is a crucial step toward reconfiguring the international monetary system. If more nations, particularly those in the Global South, begin to adopt local currencies or use alternative financial systems, the impact on global finance could be profound. Such a shift would challenge the US’s ability to influence global economic policies through control of the dollar and the institutions built around it. For BRICS countries and other developing nations, moving away from the dollar is not just a tactical decision; it is an empowering step toward greater financial sovereignty, greater resistance to the economic pressures imposed by the US, and a future where these nations have more control over their economic destinies.
The move toward de-dollarization within BRICS is not limited to currency agreements; it is also part of a broader strategy to diversify and strengthen global financial systems. As the BRICS bloc expands, it is increasingly creating regional financial institutions and mechanisms that operate independently of Western-dominated structures. The New Development Bank (NDB), created by BRICS countries, provides an alternative to institutions like the World Bank and the International Monetary Fund (IMF). The NDB’s growing involvement in financing projects outside the dollar-based system reflects BRICS’ increasing capacity to support economic development on its own terms, without relying on traditional Western financial institutions.
The pace of de-dollarization will depend largely on the economic policies and political developments within the BRICS bloc, as well as how Western nations, particularly the US, respond to this trend. While internal disagreements and divergent interests among BRICS members could slow progress, the bloc’s collective focus on reducing its reliance on the dollar suggests that the de-dollarization movement will continue to gain momentum. Furthermore, the US and its allies’ responses—whether through economic pressure or diplomatic measures—will play a crucial role in shaping the trajectory of BRICS’ efforts. If the West attempts to resist these changes, BRICS nations may accelerate their push toward a more multipolar financial system.
In the coming years, the global financial system could witness a fundamental transformation as more countries adopt alternatives to the US dollar. The de-dollarization trend within BRICS represents a pivotal moment in the global economic landscape, signaling a move toward a more balanced and diversified international financial order. As BRICS continues to develop regional financial systems, strengthen trade networks, and reduce reliance on the US dollar, it is positioning itself as a key player in the creation of a new global economic framework—one that reflects the growing influence of emerging economies and a shift away from the hegemonic structures of the past. The result could be the dawn of a new era in global trade, where the US dollar no longer holds its long-standing central position and a more multipolar financial system emerges.
