While strategic competitors in emerging markets are calling for change and the share of the US dollar held as official foreign exchange reserves has declined, it is unlikely that there will be a major shift in the US dollar's role as the central global currency due to the stability and reputation of the US government, as well as the challenges and limitations of other options like the renminbi.
The Brics economic group, consisting of Brazil, Russia, India, China, and South Africa, is discussing the possibility of expanding its membership and promoting the use of local currencies for trade settlement, with aims to challenge the dominance of the US dollar, but analysts believe that the greenback is unlikely to lose its status as the international reserve currency.
The US Dollar strengthens as several BRIC countries express support for the currency, while Fed officials remain quiet on rate cuts, and geopolitical tensions boost the Greenback during US trading hours.
The BRICS expansion, featuring six new members including Saudi Arabia, Iran, Ethiopia, Egypt, Argentina, and the United Arab Emirates, will slightly increase the group's share of global GDP, population, oil production, and global exports.
The BRICS summit is aiming to reduce reliance on the U.S. Dollar, as the coalition confirms new members including UAE, Egypt, Ethiopia, Saudi Arabia, and Argentina, and discusses the possibility of a new payment system and currency backed by gold.
The BRICS, a bloc of emerging market nations, has expanded its membership to include Saudi Arabia, Iran, Egypt, Argentina, Ethiopia, and the United Arab Emirates (UAE), with the goal of building a fair, just, inclusive, and prosperous world; however, experts question whether BRICS can effectively compete with the West given their differing priorities, and the ambition of creating a common BRICS currency to rival the dollar is unlikely to materialize due to competing interests and priorities among member states.
The BRICS alliance, now including six of the world's largest oil producers, aims to utilize its mass oil production to promote local currencies and reduce reliance on the US dollar in international trade.
The BRICS summit focused on increasing the use of local currencies for trade, but there were no discussions about a digital currency; however, three non-BRICS countries also announced plans to use local currencies instead of the dollar for cross-border trade.
BRICS is considering making local currencies the only accepted form of payment for oil and gas settlements, which could potentially shift global power from the West to the East.
India and the UAE have agreed to settle bilateral trade in their own currencies, a move that is expected to strengthen economic relations and boost exports for India. The agreement aims to lower transaction costs and reduce uncertainty caused by fluctuating exchange rates, benefiting both countries and de-risking their dependence on reserve currencies.
The BRICS nations are divided on the issue of de-dollarization, as statements from the bloc's leaders indicated, despite discussions about the creation of a common currency to rival the US dollar.
India has made a historic oil deal with the UAE, purchasing 1 million barrels of oil in rupees instead of US dollars, marking a significant step in the BRICS alliance's de-dollarization efforts.
India has recently entered into a historic oil deal with the UAE, marking a significant move away from the US dollar; however, Indian Oil and Gas Minister Hardeep Singh Puri believes that de-dollarization is not yet taking hold and that the US dollar's dominance remains unchallenged.
The dollar is not likely to lose its status as the global reserve currency despite the expansion of the BRICS group of nations and their aim to find an alternative, as technology and not commodity-based currencies are expected to be the driving force in the future.
The BRICS bloc, which has now expanded to include 11 countries, controls 30% of the global economy, 46% of the world's population, and a significant share of commodities such as manganese, graphite, nickel, and copper, as well as 42% of the global oil supply, potentially putting pressure on the US economy and challenging the traditional world order.
The US dollar's influence in the oil markets is diminishing as more oil is being transacted in non-dollar currencies, according to JPMorgan.
JP Morgan predicts that the U.S. dollar is at risk of losing its global reserve status as BRICS countries increase their use of local currencies for trade settlement, although the chances of this happening in the near future are slim.
China is working to establish a new global oil market order by building alternatives to the West's world order, including the invitation of Saudi Arabia, Iran, and the UAE to join the BRICS political and economic grouping, which would control around 41 percent of all global oil production.
The extended BRICS alliance, which now includes six new countries, has a GDP in purchasing power parity (PPP) that accounts for more than one-third of the global economy, giving them the potential to control exports of oil to the West and influence trade settlement currency choices.
The U.S. dollar's share in global reserves has fallen below 60% for the first time in decades, as other currencies like the Euro, Pound, and Yen are on the rise due to a growing number of countries settling trade in their national currencies, driven by the de-dollarization process initiated by BRICS to end reliance on the U.S. dollar.
Developing countries, including members of the BRICS and ASEAN alliances, are actively seeking to reduce their dependency on the US dollar and promote their local currencies for global trade, with a total of 21 countries officially agreeing to ditch the US dollar in 2023.
The BRICS expansion, which includes countries like Saudi Arabia, the UAE, and Iran, has raised concerns in the U.S. and EU as it poses a threat to Western-dominated financial markets, while China's influence grows and the alliance aims for de-dollarization in global trade.
India and Saudi Arabia are discussing the possibility of trading in their local currencies, potentially ending their reliance on the US dollar for cross-border transactions.
The United States is in regular contact with Saudi Arabia to ensure a stable and affordable supply of energy to global markets, according to National Security Advisor Jake Sullivan. This comes as cuts in oil output by Saudi Arabia and Russia are expected to result in a significant market deficit.
Tesla CEO Elon Musk recently revealed that the one-sided foreign policy of the United States, including heavy-handed actions and economic sanctions, is causing countries in the BRICS and ASEAN alliances to move away from the US dollar and seek alternative currencies for global trade, potentially impacting the American economy.
The increased exports of oil from the United States into Europe and Asia have allowed U.S. crude to regain its dominance in setting international oil prices, reducing volatility and potential market distortion, while also shifting power to U.S. companies and traders in the market.
Developing countries, including the BRICS alliance, are looking to end reliance on the US dollar due to increasing debt and the threat of inflation, which could lead to a decline in the dollar's value and a rise in prices. Economist Peter Schiff warns of a tragic ending for the US dollar if other countries continue to move away from it.
