The U.S. Treasury is offering higher yields from Q3 this year when compared to the returns fetched by other BRICS currencies. The U.S. dollar not only outperformed BRICS currencies, but also beat gold, oil and other commodities in September. The dollar reached a 10-month high on Wednesday, Oct. 4, 2023, as the DXY index touched 107. The greenback is just eight points away from reclaiming its 52-week high of 114. The development is the opposite of what BRICS aims to achieve, as it wants to pull the US Treasury down.
Gold dipped to its seven-month low amid the rising US dollar in the global markets. In addition, oil prices hit a new low ahead of the OPEC meeting amid the dollar peak this week. So what’s happening here? Why is the U.S. dollar on a winning streak and adding pressure on other currencies and commodities markets?
In this article, we will highlight why the U.S. Treasury is offering higher yields instead of gold, oil, and BRICS currencies.
US Treasury Offering Higher Yields: Opposite of What BRICS Wanted To Destroy
The U.S. Treasury is offering higher yields every week as institutional and foreign investors are leaving lower-yield options. Leading currencies like the euro, pound and yen are ending on a low, making the U.S. dollar seem attractive. Foreign investors still believe that the U.S. dollar is the safest investment and are rushing towards the reserve currency.
The development is going in the opposite direction of what the BRICS bloc wanted to achieve against the U.S. dollar. BRICS tried to take on the dollar by dumping $123 billion in US government bonds last month. Despite the massive sell-off from BRICS, the U.S. Treasury bonds touched a 16-year high.
However, the U.S. Treasury offering higher yields could be temporary as the economy is yet to get on track. BRICS announced previously that dethroning the US dollar is a long-term goal. Therefore, the BRICS alliance has many more shots to take that could uproot the U.S. dollar.