### Summary
Many developing countries are frustrated with the dominance of the US dollar in the global financial system and are seeking alternatives, but no concrete proposals have emerged. The dollar's influence can destabilize economies and impose financial sanctions on adversaries. However, the alternatives to the dollar have not gained enough traction, and the dollar remains the most-used currency in global business.
### Facts
- The strength of the US dollar against the Nigerian currency has made imported goods, like garments, unaffordable for local consumers.
- The BRICS bloc, consisting of Brazil, Russia, India, China, and South Africa, along with other emerging market countries, are meeting to express their grievances about the dominance of the dollar in the global financial system.
- The BRICS countries have discussed expanding trade in their own currencies to reduce reliance on the dollar.
- The US dollar is the most-used currency in global business and has shrugged off past challenges to its preeminence.
- The alternatives to the dollar, such as the euro and China's yuan, have not gained enough international gravitas.
- The dollar's influence can impose financial sanctions and destabilize economies.
- Many developing countries, like Kenya and Zimbabwe, have expressed their frustrations with the dollar and are seeking alternatives.
- Despite the frustrations, the dollar still has its supporters and is seen as a stabilizing force in some economies.
### Summary
India is unlikely to endorse a common BRICS currency, as it fears China's dominance in the bloc and the strengthening of the yuan. However, it may not immediately block discussions on the proposed currency at the BRICS Summit.
### Facts
- 🚫 India is not interested in being part of the proposed BRICS currency, as it sees it as China's attempt to gain hegemony.
- 🔄 India may not use its veto power to stop the currency proposal immediately, but it has concerns about China's dominating role.
- 🤝 The proposed BRICS currency is expected to heavily benefit China, as it is the dominant economy in the bloc.
- 🌍 The plan for a common BRICS currency may take time due to the different levels of economic development among the members.
- 📅 The 15th BRICS Summit will be held in Johannesburg from August 22-24, with leaders from Brazil, Russia, India, China, and South Africa expected to attend.
- 💲 The US dollar accounts for 58.36% of global foreign exchange reserves, while the Chinese yuan only accounts for 2.7%.
- 💱 Determining the value of the proposed BRICS currency would be a challenge due to the differing economic situations of the member countries.
- 💼 Harmonizing financial rules and regulations, such as debt-to-GDP ratio, would also be difficult for the BRICS members.
- 💔 Weaker economies in the EU, like Greece and Portugal, faced difficulties when the euro was introduced, and BRICS countries lack sufficient social security to handle strict debt-to-GDP ratios.
### Summary
Global dedollarization efforts are facing a credibility challenge as currencies such as the Russian ruble, Chinese yuan, and Argentine peso suffer significant declines, highlighting the perceived stability and reliability of the US dollar.
### Facts
- 📉 The Chinese yuan, Russian ruble, and Argentine peso have all experienced significant declines in value recently, causing their respective central banks to take measures to stabilize their currencies.
- 🌍 These declines come at a time when countries like Russia and China are actively trying to reduce their reliance on the US dollar in trade and investments, a trend known as dedollarization.
- 💰 However, the recent exchange-rate turmoil and instability of these currencies against the US dollar could undermine the dedollarization efforts and raise questions about the feasibility of finding a common currency to combat the dominance of the dollar.
- 💱 Dedollarization efforts in Argentina have been limited, with some even advocating for adopting the US dollar as the local currency to combat hyperinflation.
- 🌎 While the share of the US dollar in global reserves has decreased over the years, it still makes up nearly 60% of the world's foreign-exchange holdings, highlighting its long-standing dominance as the world's reserve currency.
Note: The text provided is truncated, so the summary and bullet points may not capture the complete context of the original text.
### Summary
The strength of the U.S. dollar against other currencies, such as the Nigerian naira and Zimbabwean dollar, has made it difficult for local consumers to buy foreign goods, leading to economic troubles in these countries.
### Facts
- 💰 The strength of the U.S. dollar has pushed the price of foreign goods beyond the reach of local consumers in Nigeria.
- 💸 Many developing countries are unhappy with the dominance of the U.S. dollar in the global financial system.
- 🌍 The BRICS bloc, which includes Brazil, Russia, India, China, and South Africa, will discuss their grievances against the dollar at a meeting in Johannesburg, South Africa.
- 💵 The alternatives to the U.S. dollar, such as the euro and China's yuan, have not been able to rival its dominance.
- 🇦🇷 In Argentina, a presidential candidate is calling for the U.S. dollar to replace the country's troubled peso.
- 💼 In Zimbabwe, the U.S. dollar is widely used in transactions due to the instability of the Zimbabwean dollar.
- 💸 Vendors in Zimbabwe are even mending damaged U.S. dollar bills for a small fee due to a shortage.
### Credit
By: Dionne Searcey and Constant Méheut
Source: The Washington Post
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 inclusion of oil-producing countries like Saudi Arabia and the UAE into the BRICS alliance could lead to 90% of the world's oil trade being settled in local currencies instead of the USD, potentially triggering a shift away from the U.S. dollar and impacting the global finance system.
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.
Russian President Vladimir Putin stated at the BRICS Summit that the decline in the global role of the US dollar is an irreversible process, emphasizing the bloc's de-dollarization efforts.
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.
Russia has called on the BRICS alliance to abandon the US dollar for trade settlements and instead embrace local currencies, in a continuation of the bloc's de-dollarization efforts.
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 article discusses the challenges of dollar hegemony and argues that the attempt to create a Brics currency is misguided due to the vast differences in the economies and political systems of the Brics countries. It suggests that the world needs a better currency system, as the current one heavily relies on the US dollar which poses risks to the global economy.
The US dollar will remain dominant in global trade, but China's yuan is gaining popularity among developing countries such as Russia, Brazil, India, and South Africa.
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.
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.
The US dollar experienced a major technical reversal due to a weaker JOLTs report, leading to a drop in US interest rates, while market positioning played a role in the price action; the focus now shifts to personal consumption figures and US jobs data, with the euro and sterling firm but most other G10 currencies softer, and emerging market currencies mixed. In Asia, most large bourses advanced, but Europe's Stoxx 600 fell after rallying in previous sessions, while US index futures traded softer; European bonds are selling up, gold is consolidating, and oil prices are firm. Australia's CPI slowed more than expected, China is expected to release the August PMI, and Japan reports July retail sales. The US dollar has seen no follow-through selling against the yen, yuan, or Australian dollar, while the euro and sterling staged impressive price action. The JOLTS report saw the dollar and US rates reverse lower, and today the US reports advanced merchandise trade figures for July, with the Canadian dollar as the worst performing G10 currency yesterday.
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 dollar's status as a global reserve currency is facing challenges as countries like China and India promote trade in their own currencies, digital currencies gain popularity, and geopolitical conflicts threaten the international monetary system dominated by the dollar.
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 U.S. dollar declined due to weaknesses in economic growth, leading to a boost in the performance of gold and U.S. equities, while other global assets experienced mixed price movements throughout the week.
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.
The residual impact of sanctions against Russia is causing divisions among the Group of 20 countries, with some nations resisting US-led efforts and forming alliances with Russia and China, while the BRICS nations are seeking to reduce reliance on the US dollar.
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 Indian Rupee is weakening against the US dollar, causing concern for Indian authorities who fear that it could impact the country's import and export sectors, with suspicions that India may be taking measures to limit the dollar's growth; similarly, other BRICS member countries like China and Japan are also trying to curb the US dollar's growth.
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.
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.
The BRICS coalition, along with new members, aims to reduce the dominance of the US dollar by using their own currencies for oil trade, posing potential risks to the US's global leadership and economy.
BRICS countries are reducing their ties with the U.S. Treasury by selling off Treasury bonds, opting instead for gold, local currencies, and commodities like oil and gas, in order to hedge against U.S. economic policies that may limit the dollar's ability to fund its deficit. Data shows that BRICS has already offloaded $18.9 billion in U.S. Treasury bonds this month, with China leading the way by selling $117.4 billion worth of U.S. government debt this year. Other BRICS members, including Brazil, India, and the UAE, have also decreased their U.S. Treasury holdings. In total, BRICS has removed $122.7 billion worth of U.S. Treasury bonds in 2023.
The US economy's growing debt and slow growth may lead to a "long, slow grind," while regional blocs in Asia and Europe pose a threat to the dollar's status as the global currency.
The US dollar maintains its dominant position as the leading global currency, with a 58.9% share of global currency reserves, despite a gradual decline over the past 20 years.
Bitcoin and gold are expected to thrive amidst fiscal problems in the US economy and a potential pivot from the Federal Reserve, according to macro investor Luke Gromen. Gromen also suggests that the launch of a gold-backed currency by the BRICS alliance may weaken the US dollar as the world's reserve currency.
The BRICS group is considering the idea of a common currency, but one expert believes it is unlikely to happen due to tensions between China and India.
BRICS (Brazil, Russia, India, China, South Africa) is aiming to challenge the global reserve status of the US dollar by exerting control over a significant portion of the oil sector, starting with Russia's Gazprom Neft announcing that it will no longer rely on the US dollar for trade and is open to accepting local currencies.
India has been accused of aggressively selling US dollars to prevent its local currency, the Rupee, from depreciating, a move that has left foreign exchange traders puzzled. This intervention by India, along with similar actions by China and Japan, reflects a trend among BRICS countries to challenge the dominance of the US dollar in international currency markets.
BRICS has surpassed the G7 in terms of purchasing power parity, contributing 31.5% to global GDP compared to the G7's 30.7%, and if BRICS succeeds in ditching the US dollar for global trade, the gap could widen further, potentially tilting financial power to the East.
BRICS' expansion and the dominance of the oil market could lead to the US and Europe needing local currencies to buy oil, aligning with the bloc's de-dollarization agenda.
The BRICS alliance, specifically China, is selling off billions worth of US treasuries and stocks to defend the weakened Yuan and halt the rise of the US dollar against the Yuan, with China alone dumping $21.2 billion in August, the highest in four years.
