The US dollar is on a slippery slope as BRICS is looking to topple it from the world’s reserve currency status. The de-dollarization agenda is gaining steam as the alliance is convincing developing countries to cut ties with the US dollar. On the heels of the BRICS de-dollarization efforts, Citi Bank has predicted the future of the US dollar. Citi gave insights on how the leading currency could perform in the coming months.
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BRICS: The US Dollar Could Dip, Predicts Citi Bank
Citi Bank has forecasted that the US dollar could decline amid the global slowdown and remain bearish for the next two months. The DXY index, which tracks the performance of the USD shows that currency at 101.40. That’s a sharp decline as the currency was at 106.20 in June this year. The decline comes when BRICS is advancing to push the US dollar to the bottom of the charts. Citi Bank forecasts that BRICS currencies could slightly outperform the US dollar in the next two months.
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Read here to know how many sectors in the US will be affected if BRICS ditches the dollar for trade. Also, Citi Bank’s analysts suggest that high foreign exchange currencies like the Euro and Pound could dip in tandem with the US dollar. The bank remains cautious about the Euro and wrote that its growth could lag in the currency economic crisis. This puts the US dollar and Euro under the spotlight allowing BRICS currencies to move ahead.
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In conclusion, Citi Bank’s outlook on the US dollar is bearish for the short-term amid BRICS de-dollarization but is bullish in the long-term. “We do think, though, that ultimately the dollar can strengthen a bit later on in the year given our economists call for a U.S. recession and ultimately an ECB pivot,” they wrote.