### 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
Many developing countries, including BRICS nations, are frustrated with the dominance of the U.S. dollar and will discuss alternatives at a summit in Johannesburg. However, the dollar's position as the dominant global currency remains unchallenged.
### Facts
- The strength of the U.S. dollar against local currencies in developing countries has caused prices of foreign goods to soar, leading to reduced sales and job layoffs.
- The BRICS bloc, consisting of Brazil, Russia, India, China, and South Africa, along with other emerging market countries, will discuss their grievances against the U.S. dollar's dominance at a summit in Johannesburg.
- The BRICS countries have previously talked about introducing their own currency, but no concrete proposals have emerged. However, they have discussed expanding trade in their own currencies to reduce reliance on the U.S. dollar.
- The U.S. dollar is the most widely used currency in global business and previous challenges to its dominance have failed.
- The BRICS countries launched the New Development Bank in 2015 as an alternative to the U.S. and European-dominated International Monetary Fund and World Bank.
- Developing countries are concerned about the U.S.'s use of the dollar's global influence to impose financial sanctions and the destabilizing effects of fluctuations in the dollar on their economies.
- While the euro and China's yuan have gained some traction in recent years, they still do not rival the dollar in terms of international gravitas.
- The alternatives to the dollar have not been able to gain dominance, and any shift away from the dollar will take time and trust.
- Some countries, such as Argentina and Zimbabwe, have experienced economic turmoil and have turned to the U.S. dollar for stability.
### 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.
Brazil's President, Luiz Inacio Lula Da Silva, announced at the BRICS Summit that the economic alliance will officially abandon the US dollar for trade settlements, aligning with de-dollarization efforts and expanding to include six additional countries by 2024.
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 bloc of developing nations, including Saudi Arabia, Iran, Ethiopia, Egypt, Argentina, and the United Arab Emirates, has agreed to expand in an effort to reshape the world order it sees as outdated and tilted against them. However, the expansion faces challenges due to differing interests and concerns among the member countries. Additionally, the idea of a BRICS trading currency called BRICKs is seen as flawed and unlikely to be successful. The notion that the GDP of the BRICS bloc will surpass that of the G7 countries is also disputed, with China's demographics and debt bubble being seen as potential obstacles.
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 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 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 expansion and their de-dollarization efforts have been met with a relatively calm response from the US, Germany, and the European Union, emphasizing the importance of countries choosing partnerships based on their national interests.
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 biggest risk of de-dollarization is that the US could lose a key tool it's used to fight past economic crises, according to JPMorgan.
China's economic tactics, including BRICS expansion, are aimed at challenging the US economically rather than engaging in a war, according to US presidential candidate RFK Jr., who believes China wants to bury the US on an economic playing field while still relying on it.
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 rising U.S. dollar is causing concern among foreign officials and investors, but it remains uncertain if anything can be done to stop its rise or if it will negatively impact U.S. equities.
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 US dollar's dominance as the world's reserve currency is at risk due to growing debt in the US, according to economist Barry Eichengreen, highlighting the importance of controlling debt to maintain the dollar's global role.
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.
Former Zimbabwe finance minister, Tendai Biti, has warned of an economic "disaster" if the country moves away from the dollar and joins the BRICS bank, as there is intense debate about de-dollarization within the bloc of Brazil, Russia, India, China, and South Africa.
The US dollar has made an unexpected comeback, with its rebound causing ripples in global markets and impacting investors, officials, and companies.
The BRICS bloc, including countries like India, China, and Russia, is slowly reducing its dependency on the US dollar and using their local currencies for trade, which could potentially weaken the US dollar's position as the dominant global currency.
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 U.S. economy is experiencing turbulence, as inflation rates rise and U.S. Treasuries lose value, leading to concerns about whether Bitcoin and risk-on assets will be negatively impacted by higher interest rates and a cooling monetary policy.
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 American banking, trade, forex, tourism, and other sectors could be severely impacted if BRICS countries stop using the U.S. dollar for trade, leading to potential financial catastrophe and hyperinflation.
The BRICS New Development Bank has announced a 3-year de-dollarization plan to increase local currency transactions and reduce reliance on the US dollar for developing country investments, aligning with the alliance's strategy to move away from the dollar. Additionally, the bank's expansion may greatly affect its lending model and facilitate the alignment with the alliance's strategy.
Janet Yellen, the Treasury Secretary, believes that no existing currency can replace the US dollar as the global reserve currency, despite its recent decline, but warns that its share may continue to decrease as countries diversify; however, there are alternative investments like gold, fine art, and real estate that can help mitigate risks associated with the dollar's decline.
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.
EUR/USD rebounds after recent weakness, but geopolitical tensions in the Middle East continue to pose a risk for riskier currencies.
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 dollar’s status as the world's reserve currency is at risk unless the US controls its spending, warns bond market expert Jeffrey Gundlach. High interest rates and the growing US debt could lead to out-of-control inflation and jeopardize the future of the US dollar.
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.
