US Treasury Secretary Janet Yellen confirmed that sanctions led to BRICS kick-start the global de-dollarization initiatives. The US pressed sanctions on Russia in February 2022 for invading and waging war against its neighboring country Ukraine. Since then, BRICS has been using all methods to cut ties with the US dollar and use local currencies like the Chinese yuan for trade settlements.
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BRICS weaponized development by convincing developing countries that their economies could collapse if the US pressed sanctions on them. Developing countries and BRICS members began using the Chinese yuan for trade with China and not the US dollar. Russia wholeheartedly accepted the Chinese yuan for oil payments making it the most used currency for trade in two years.
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BRICS: Sanctions Are Hurting the US Dollar & Helping the Chinese Yuan
Alexandra Prokopenko, an economic analyst wrote in her paper that the Chinese yuan is benefiting from the sanctions on Russia. The sanctions eclipsed with the BRICS idea of de-dollarization making the agenda a stronger force to reckon with.
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“The new sanctions are turning the Chinese yuan into the main currency of exchange trading and settlements in Russia once and for all,” she said. “In May, its share in exchange trading once again hit a new record, reaching 53.6 percent. Its share in the over-the-counter market was 39.2 percent.” BRICS members China and Russia are advancing in making the Chinese yuan a global currency by bringing the US dollar down.
Read here to know how the major sector in the US will be affected if BRICS ditches the dollar for trade. The move will have severe implications on the USD and lead to local currencies strengthening on a global scale. The next few years are important for the US dollar to survive or perish from the onslaught of the de-dollarization agenda.