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The Age of BRICS Currency: Implications for US Dollar

The BRICS countries are reportedly prepared to challenge the US dollar's long-standing dominance in global trade in an era of changing global financial dynamics. With the introduction of a shared currency, these developing nations hope to create a more equitable and open system for conducting international trade.

Discussions over a shared currency among the BRICS countries - Brazil, Russia, India, China, and South Africa - are anticipated to take center stage at the upcoming summit, which will take place in Johannesburg in August. Together, these countries produce one-third of the global economy, sometimes even outperforming the G7 economies. They want to undermine the dominance of the US dollar and offer a competitive alternative for global trade by combining their economic might.

The US dollar has long been used as a tool of American dominance abroad, but its popularity has created a lot of uncertainty in the world economy. The BRICS countries are looking into the prospect of a single currency because they understand the importance of stability and justice in global trade. While there are still obstacles to overcome, creating a BRICS currency unit is not wholly impractical.

Historically, the adoption of a single currency necessitates extensive coordination and the gradual abolition of local currencies. Rather than completely replacing local currencies, the BRICS nations' current efforts are mostly concentrated on establishing a monetary unit specifically for settling cross-border trade. The idea is to reduce the task's complexity and boosts its viability. The BRICS unified currency could operate as a stimulus for more equitable and open international trade by expediting trade settlements.

Recent sanctions imposed by the US and EU against Russia have also prompted other nations to look for alternatives to the dollar as a reserve currency. Local currency transactions between BRICS countries have thus gained pace, with over 70% of commerce between China and Russia currently taking place in each country's own currency. Pakistan and Brazil are two more nations looking into similar practises.

As the US Federal Reserve stops raising interest rates, which causes the currency to decline, the de-dollarization movement is anticipated to pick up steam. Due to China's responsible issuance practises, the yuan is seen as a more reliable currency and the change could hasten its internationalisation. Trade between the member nations is projected to become more equitable and practical with an increase in local currency settlements. These changes are anticipated to have significant effects on the global economy, particularly how the US dollar is perceived.

The BRICS common currency plan is an example of the developing trend of alternative currencies, which suggests that the dominance of the US dollar in global trade may be coming to an end. Through their combined economic might, the BRICS countries aim to overthrow the dollar's hegemony and create a more open and equitable medium for international trade. Under the current atmosphere, expect the worldwide financial landscape to change as local currency settlements spread and de-dollarization picks up steam.


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