The US dollar is showing no mercy to BRICS and the de-dollarization agenda, as it sent leading BRICS currencies sliding in the charts in July 2024. The Chinese yuan, Indian rupee, and even Asia’s leading currency, the Japanese yen are struggling to counter the dominance of the US dollar.
Also Read: BRICS: Sanctions Turning Chinese Yuan as Main Currency, Not US Dollar
The development indicates that the BRICS’ de-dollarization initiative is bearing no fruit against the US dollar. In return, the US dollar is the one that’s hammering BRICS nations’ currencies in the forex market. On Friday’s closing bell, BRICS member India’s rupee fell to a new all-time low of 83.73 against the USD.
China, which spearheaded the BRICS de-dollarization campaign is seeing the yuan fall to a seven-month low against the US dollar. The Japanese yen is down to its 34-year low struggling to grow a spine in the forex markets. This puts the US dollar in the driver’s seat and other local currencies in the back.
Also Read: 40 Countries Express Interest To Join BRICS Before 2024 Summit
BRICS: Why is the US Dollar Rising & Local Currencies Falling?
The firmer US Treasury yields helped the dollar turn the tides against leading local currencies in the markets. The DXY index, which tracks the performance of the USD shows the currency safely above the 104.30 mark. While the USD is holding on to its momentum, the same cannot be said for BRICS nations’ currencies.
Also Read: After Oil, BRICS Accounts For 72% of the World’s Rare-Earth Metals
The strengthening of the US dollar is pushing BRICS currencies down despite attempts to challenge its de facto reserve status. Additionally, currency investors buying the US dollar on dips has cemented its resistance level making it bounce back harder.
“The markets got a little overextended and firmer yields have helped the dollar,” said Shaun Osborne, Chief Foreign-Exchange Strategist at Scotiabank. Now that Biden’s presidency is coming to an end, the US dollar’s prospects will be decided by the next president.