BRICS is now under pressure from President-elect Donald Trump to abandon the formation of their new currency. For the uninitiated, the alliance is working on the formation of a basket of currencies to settle cross-border transactions. The alliance wants to cut ties with the US dollar for global trade and use currencies that benefit their native economies. Trump has warned of a 100% tariff on goods entering the US if the bloc sidelines the US dollar globally.
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Read here to know how many sectors in the US will be affected if BRICS ditches the dollar for trade. The American economy will be severely impacted and its global hegemony could be uprooted if the USD is not accepted by developing countries. It could also lead to hyperinflation in the homeland making daily essentials skyrocket.
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BRICS Currency: Economist Predicts its Future Prospects
On the heels of the tariff threats, leading economist Abhishek Upadhyay from ICICI Securities PD has predicted the prospects of the upcoming BRICS currency. According to the economist, the BRICS alliance might find it hard to keep the new currency afloat in the forex markets.
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He revealed that the common currency will not be common as BRICS compromises of contrasting mindset with geopolitical differences. For example, India is not a close ally of China despite the two being members of the bloc since 2009.
India is also distancing itself from the de-dollarization agenda as it needs the US dollar to keep its economy afloat. The Modi-led government also has a non-committal stance on the new currency and is maintaining a neutral stand.
Also Read: BRICS: 2 Countries Officially Abandon the US Dollar for Trade
“A common BRICS currency is a long shot given the group comprises a very heterogeneous mix of countries at different stages of economic development and contrasting geopolitical preferences,” said Abhishek Upadhyay, Economist at ICICI Securities PD to Mint. In conclusion, the BRICS currency might face difficulties in seeing the light of the day against the mighty US dollar.