The BRICS alliance is challenging the US dollar’s global reserve status by putting their local currency forward for global trade. BRICS aims to suffocate the US dollar by ending dependency on the greenback and promoting local currency for cross-border transactions. Therefore, the US dollar remains under tremendous pressure as oil-producing countries have now joined the BRICS bloc. The new members—Saudi Arabia, UAE, Egypt, Iran, and Ethiopia—export millions of barrels of oil around the world. Argentina is the only new member that is not an oil-producing nation.
Also Read: BRICS: Oil Prices Remain Under Pressure as U.S. Dollar Strengthens
BRICS: Analyst Predicts How Long Us Dollar Will Remain Global Currency
Former US Treasury Secretary Larry Summers predicted that the US dollar would remain the de facto global currency for the long term. He stressed that he does not see the possibility of the US dollar changing its position as the reserve currency. “If you look at the US share of global GDP, it’s really very high by historical standards right now,” he said to the Financial Express. Summers expressed that every generation in America experiences a better economy, purchasing power, and lifestyle, among others, than their predecessors.
Also Read: US Economy Could Settle Into a Long & Slow Grind, Predicts Economist
“The last generation, if you look at what in some ways is a better, more forward-looking indicator. The share of the United States in total global stock markets is higher than it’s been in a long time. So I look at those things and I see an American economy that I think, for better or for worse, is likely to be fairly central to the global economy,” he said.
Also Read: US Dollar Reaches 10-Month High, Weakens BRICS Currencies
He stressed that the US dollar will eventually take care of itself when the American economy further booms and added, “So I think if we keep the fundamentals of what we’re doing reasonably strong, and do things right, the dollar will likely take care of itself.”
BRICS currencies are also facing the heat this month as the US dollar is printing new highs. The dollar is also rising against gold, giving BRICS the jitters as the bloc is the top buyer of the precious metal this year.