The year has seen the BRICS bloc be unabashed in its quest to lessen international reliance on the US dollar. Subseuqnlety, with its expansion announcement and local currency usage, is set to reach new heights in the coming year. Specifically, three things could lead to BRICS de-dollarization plans being fast-tracked in 2024.
The economic alliance has welcomed six new countries to join its cause at its 2023 annual summit. Moreover, their presence should provide greater assistance to eliminate greenback prominence. Yet it will combine with other factors that could equate to greater lengths taken in the overall de-dollarization of the bloc.
Firstly, the advanced de-dollarization begins with the potential stepback awaiting the currency.
US Dollar Set to Take a Step Back in 2024
Also Read: ING Predicts the Future of the US Dollar
The primary reason why the BRICS bloc could expect de-dollarization to advance in 2024 is the performance of the US dollar. In a recent report, an ING analyst discussed their expectation that the currency will take a step back. Ultimately, that would prove to work in favor of the bloc’s efforts.
The report noted their belief that “tighter interest rates will finally catch up with the US economy next year,” preceding its decline. Moreover, they stated that a potential US recession would begin the “dollar’s long goodbye.” Subsequently, this provides a key time for the BRICS bloc to advance its local currency plan.
Chris Turner, Global Head of Markets, also noted that the coming year will provide a reprieve for currencies overtaken by the greenback. “We think 2024 will be a year in which currencies and the rest of the world can break after being dominated by the strong dollar trend for so long,” Turner stated.
However, it could also be a prime time for the economic alliance to implement another plan that has been brewing for some time.
BRICS Currency Poised to Dominate Upcoming Annual Summit
At its 2023 annual summit, the BRICS bloc announced an invitation to six countries in the hope of expanding its presence. Indeed, the bloc invited economic juggernauts like Saudi Arabia and the United Arab Emirates (UAE) to join. Moreover, they included developing economies such as Ethiopia and Egypt.
Many expect a similar landmark announcement to take place at the upcoming 2024 summit. With Russia hosting the event, many expect the announcement of a BRICS currency to arrive. The country has long discussed the benefits of such a currency, and the summit would be the premiere chance to bring its development to the globe.
The announcement alone will have massive geopolitical implications, especially amid the dollar’s expected state. The global power balance has already begun to shift, and the BRICS currency arrival and the US dollar decline would create a trend that should reinforce each other. Moreover, the development should speed up the de-dollarization efforts that have already been taking place.
Oil Market Bounce Back and Expansion Made Official
Finally, de-dollarization should build on both the dollar’s performance, the BRICS currency’s arrival, and the official expansion of the bloc being made official. At this year’s summit, the bloc only invited listed countries. However, it had stated that 2024 would see their place in the bloc made official. Such an event should create further positive sentiment.
Additionally, two BRICS powerhouses, Russia and Saudi Arabia, should be returning to form in terms of the oil market’s downturn. Subsequently, the sector should be in a positive state, which would again ensure that the power balance remains multipolar.
These combined developments would continue the shift in global perception. As countries observe these things, moving away from the US dollar would be a natural occurrence. Moreover, many of the nations that have already sought to take such actions this year will see fruit in 2024.
Altogether, the US dollar should see tangible effects of 2023’s work from the BRICS bloc. Subsequently, it should appear as though BRICS de-dollarization plans are rapidly accelerating as 2024 is underway.