BRICS is doing everything to puncture the prospects of the US dollar as the White House is accused of weaponizing the currency. The bloc kick-started the de-dollarization agenda and is now convincing emerging economies to trade in local currencies. The alliance has been successful as many developing countries signed trade deals settling cross-border transactions in native currencies.
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Read here to know how many sectors in the US will be affected if BRICS ditches the dollar for trade. If the White House fails to import the dollar, the U.S. could enter a new era of hyperinflation. The US dollar needs to maintain its dominant position in the currency markets to make other countries absorb its deficit.
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BRICS: The US Dollar Losing Its Reliability, Say BMO Analysts
Commodity analysts at BMO Capital Markets wrote that the US dollar is losing its sheen and BRICS is leveraging the development. The notion to push local currencies ahead for trade and transactions is easier now than ever before. “The US dollar is no longer seen as a reliable reserve asset,” wrote the analysts. The note added, “Looking at the broader picture, the combination of deficit spending, tariffs, and pressures on smaller nations has fueled market uncertainty. Increased uncertainty typically leads to lower interest rates for Treasuries but also causes turbulence in equity markets,” he said.
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The recent stock market crash is also a cause of worry as investors lose trust in the trade sector. The note added that BRICS could also put gold forward and diversify their reserves more without the US dollar. “Recently, we’ve seen heightened volatility and a meaningful decline in equities from their highs earlier this year. This underscores a fundamental question: What can people truly trust? The answer remains a physical metal, gold, which has preserved its value for thousands of years and has never been debased, unlike every currency in history.”