Leading investment bank JP Morgan has analyzed the future of the US dollar amid the BRICS global de-dollarization frenzy. Developing countries are looking to strengthen their native economies by using local currencies for all trade and transactions. This is adding pressure on the USD as it could lose in the supply and demand mechanism in the forex markets.
Also Read: BRICS: U.S. Dollar Crisis Could Begin in 2025
Read here to know how many sectors in the US will be affected if BRICS ditches the dollar for trade. JP Morgan published a new report on how long it could take for the US dollar to lose its dominant status against the backdrop of the BRICS de-dollarization agenda.
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BRICS De-Dollarization: JP Morgan Predicts How Long the US Dollar Will Be ‘Dominant Currency’
According to the latest report from JP Morgan, BRICS is successful in initiating the de-dollarization agenda in all financial transactions. The investment bank wrote that the alliance has stopped using the US dollar in the commodity space since 2022. Local currencies have been increasingly used for energy transactions in the commodities space in the last two years.
Also Read: BRICS: 85% Trade Settled in Local Currencies, Not US Dollar
The global investment bank JP Morgan also wrote that new payment systems that facilitate cross-border transactions are settling trade without the US dollar. The development is undermining the US dollar’s clout while BRICS is benefiting from the change in payment systems.
“The narrative that the US dollar’s reserve currency status is being eroded has gained momentum as the world is dividing into trading blocs (BRICS) in the aftermath of Russia’s invasion of Ukraine,” said Joyce Chang, Chair of Global Research at JP Morgan. Central banks of developing countries are also diversifying their reserves by including gold and other local currencies.
Also Read: Goldman Sachs Predicts the Future of BRICS Currency
However, the other global factors show that the US dollar dominance remains well-enriched, wrote the bank. JP Morgan summed up its report that the BRICS de-dollarization agenda could “take decades” to reap fruits and the US dollar will be the de facto currency for many more years. “The factors that support US dollar dominance remain well-entrenched, and meaningful de-dollarization will likely take decades,” read the report.