February 2025

US $ defends role as Global currency

Israel's central bank sells $30 billion in foreign reserves after shekel slides to 7 year low

• Announcement in a bid to support markets following the deadly incursion by Hamas militants over the weekend.
• From $200bn of total foreign reserves, this is an offload of 15% in one shot.
• And if you see the careful decline from August when it was at an all-time high, you'd understand nothing is sudden or abrupt here.
• The war was not planned but the response was. Much in advance.
• The area under dispute (Gaza) has to be cleansed from radicals for the entire Middle East to progress.
• Hence you see a very measured, restraint approach from Israel instead of immediately attacking. The ground operations in Gaza have still not started. Vidurneeti

Bank of Japan

February 2025

₹ dominance through UPI in Qatar

When a board flashed at Qatar airport of UPI in 2022, signs of UPI going global & ₹ dominance. 3 years later news comes - https://www.qatarliving.com/forum/news/upi-payments-are-now-available-qatar

Move away from existing SWIFT

In a de-dollarized world you will have to by-pass the existing payment systems & gateways. That's a basic condition, therefore all players working in that scheme (including the US) will move away from the prevalent system - SWIFT.

Multiple trade-able currencies in the market

Since in a multilateral world order, multiple currencies will be trade-able & not just one ($), therefore you see Russia, China, India, all building their own gateways & apps for their citizens locally.

Once these platforms gain acceptance locally, people get used to using them, then begins foreign journey. Acceptance at countries beyond borders for remittances, exchange, payments, etc.

Then comes the critical part - linking of these various flavours, thus enabling cross-country trade bypassing the $, & more importantly - SWIFT.

Why bypassing it is important for dedollarization?

Software spying you through phone

When you exchange messages on Facebook or WhatsApp can US read your messages? You are living in a very media-infested world if you have reasons to believe otherwise. Even the keystroke you make on your mobile keyboard is foreign owned. A software sitting on your mobile, which you willingly downloaded because it gives you cool features for free.

Same as SWIFT spies countries transactions

On SWIFT, where two countries commence a deal say, India buying a kg of cotton from China for $x. Their network, which reads the value, deducts from sender & credits it to the receiver, both identities known, their respective details known, the quantity traded, & lastly the price. Imagine the power such information when possessed. Every trade happening across the globe through the SWIFT is therefore known.

Ever wonder, why our IT captains of the industry did not build a decent social media app, or messaging service ever? Was it incompetence or compulsion?

People have no idea how difficult & brave step it was to build UPI. And so goes the same for similar apps in other countries, why they all came up in same timeframes by exactly those countries whose intent was aligned to end $ hegemony.

Demonetisation, a bomb

With time, everything appears. Such people still say Demonetization was a failure. The single biggest atom bomb that destroyed economy of at least 2 nations in our neighborhood whose seeds were sown in 2015 BRICS.

Connect why Qatar

Whom do they buy energy from to keep warm next winters? How does it benefit us? Our ally no longer needs to sell cheap crude to us at discounted price. US sells oil to us & we buy it to balance 3T - Trade, Tariffs & Trump. We help our new brother by buying their oil & gas to keep their economy, take them onboard later to benefit from IMEC. You are the big brother of the region. Only 1 word of caution - All this is happening because you have birth rates. You are the human resource, the skill, the consumer, the markets, everything because of that 1 thing.

Brother's from West Asia

Why PM Modi has extended his exclusive brother reference for the third time - this one to the Amir. He calls brother only to MBZ & MBS.

See this is a region which has maximum radicalization, which has to be defanged. Defanged for trade to flourish. Trade, because oil & natural gas days are coming to end even if the supplies remain in plenty or forever. Secondly, there's a rogue useless neighbour which has nukes. The state is designated to disassemble & collapse. But the nukes can be given either to a friend who supports them in all their wrongs say, Kashmir. Or by someone who has drowned them in loans & now demands returns with interest. Both these candidates are in this very region so kindly get out of China obsession right away. Who will defang them of the nukes? Have some patience, brother.

Who is the loser in all this?

These useless neighbour kind of countries are mere pygmies. They will be taken out at a date & time of our choosing, have no doubt on that

When you are friends of the most powerful country in the world & their own economy stares at a collapse, then the first thing that friend does is - save itself & throw you as a bargain chip. And if you are not just friends, but allies (NATO, Canada, UK, etc.)? Your powerful friend stops giving you free money from the free printing machine it has, no doles instead tariffs on your goods (Canada & Mexico), no contribution to NATO missions, no funds/weapons to wars, forces you to buy your Treasury bonds (see which ally country is increasing UST).

March 2025

Rupee outperforms Asian peers in 6 years

California included cryptocurrency

California has officially included cryptocurrency protections in its newly proposed digital asset bill.

If passed, it will guarantee the right to self-custody for nearly 40M residents and prohibit discrimination against crypto use.

April 2025

August 2025

The Weakening Rupee

• Tariffs hits the country's export earnings
• Boost demand for dollars in an energy import dependent country
  • cheaper rupee is bad news for oil import dependent India as imports become costlier
  • If India stops buying cheap russian oil , it will rise the fuel bill by $5 billion annually.
• Curb foreign exchange inflows
• US Federal reserve cautious on cutting interest rates, consequent higher yields on US treasuries will attract inflows from foreign investors, who are expected to pull out from emerging markets like India and further weaken the rupee
• Indian rupee depreciated to 2.1% on year to 84.57 rupees per dollar
• RBI intervention through drawing down forex reserves, more than $9 billion in August 1.
• RBI sold $5 billion worth of US dollars, bringing the reserves to $688.9 billion from the highest levels of $704.9 billion last september.

Whether the central bank should instead allow the rupee to find its own level

• depreciating rupee are welcomed by exporters as it improves their competitiveness in selling their goods abroad
• RBI should follow a flexible exchange rate policy, as since 1993.
• During global financial crisis, the so called taper-tantrum, it hit lows to 68.8 rupee per dollar in 2013 August.
• RBI did not defend the rupee by drawing down forex reserves, instead it even built up reserves through these episodes.

International financial theory

• As the economy remains open to capital inflows and outflows, and the central bank seeks a strong monetary policy to check inflation and boost growth, the objective of exchange rate stability cannot be simultaneously met.

Germany's Awakening threatening US hegemony ¹

Germany aims to increase defence spending to 3.5% GDP by 2029

Germany is set to double its defence spending, committing $761 billion over the next five years, which will make 3.5% of its GDP by 2029, exceeding NATO's target.

In 2025, Berlin allocated $101 billion or 2.4% of its GDP for defence, with an additional $10.6 billion to Ukraine. By 2029, this is set to surge to $109 billion.

Top military spender in Europe

Berlin is now the Europe's top military spender and Ukraine's leading arms supplier. Germany is also the economic powerhouse of Europe.

Speculation of Russo German entente

America is against the emergence of Russo - German entente, and their energy cooperation being not a secret, and the Nord Pipelines 1 and 2.

Sabotage by US on Nord pipeline

A report by the journalist, claimed that US Navy with assistance from Norway, orchestrated the sabotage attack. The motive was to weaken Russia's energy leverage over Europe.

UK France agreement

President Macron and Prime Minister Starmer, announced their nations would cooperate to provide Europe with a nuclear umbrella including potential deployment if allies face extreme threats. This is based on their 1995 agreement to deepen nuclear ties.

1958 MDA - US and UK

UK's nuclear arsenal is based in Trident missile system, which is deeply integrated with the US under the 1958 Mutual Defence Agreement (MDA) US - UK. This requires US approval for missile maintenance and use, limiting the UK's strategic autonomy.

London is Washington's trusted ally, while it still have its doubts in Paris and Berlin.

Independent France nuclear arsenal

The UK's nuclear arsenal is interoperable within NATO, while France maintains a independent nuclear programme having withdrawn from NATO's military command in 1966.

UK and Europe

UK has always been a reluctant Europe partner, joining the bloc in 1973 integration process, initially staying out of European Economic Community (EEC).

Unified Germany, a threat to Europe

During late 1980s, as German reunification became inevitable after the Berlin wall's fall, British Prime Minister Margaret Thatcher expressed deep reservations, saying, "Maintaining two separate Germany states was preferable, a unified Germany as potential threat to Europe's balance of power."

References

Footnotes

1. EPW - Vol 31, August 2, 2025 ↩