The BRICS alliance might not be able to deter the US dollar as Goldman Sachs predicts the currency could experience a tariff-fueled boom. Currency traders could make stellar profits if they take long positions on the USD, wrote the global investment bank. Tariffs from the Trump administration could bolster the appeal for the greenback leading to further gains, the note from the bank read.
Also Read: Brazil Plans To Reject BRICS Currency
If the US dollar continues its rise in the charts, BRICS will have a hard time safeguarding their respective local currencies. The development could derail the de-dollarization agenda and lead to the greenback strengthening further. The USD faced severe challenges from BRICS who were looking to dethrone it from the world’s reserve currency status.
Also Read: De-Dollarization: Economist Predicts the Future of the US Dollar
BRICS: Tariffs Could Fuel US Dollar Boom, Says Goldman Sachs
The escalating trade wars could benefit the US dollar in the long haul, wrote Goldman Sachs in a note and the development could impair the BRICS bloc. “Ultimately, not all tariffs are equal when it comes to FX,” wrote Goldman Sachs strategists Karen Reichgott Fishman and Lexi Kanter in a note. “But given the unwind of premium in key crosses in recent weeks, we once again think tariff risks look underpriced, making long dollar exposure now look even more attractive.”
Also Read: Not 100%, BRICS To Face 150% Tariffs If They Ditch the US Dollar
Trump’s protective style of governance could drive inflation but in turn, support US yields, the note read. The tariffs are ruffling a lot of feathers in the markets as they directly affect the imports and exports sector. BRICS was looking to outdo the US dollar but found itself in a stiff economic situation.
The local currencies of BRICS countries have already plummeted to new lows against the US dollar this year. The de-dollarization initiative could stagnate for the next four years as threats of tariffs loom from Trump. Read here to know the full list of tariffs imposed by Trump since he took office.