Why are BRICS countries so gung-ho about dedollarization? Well, picture this: they’re kinda fed up with the US dollar hogging the spotlight in global trade and finance. It’s like they’re saying, “Hey, we’re big players too!”
First off, they want to shake off some of that dependency on the greenback. You know, just in case Uncle Sam’s economic policies start messing with their own economies. Plus, they’re all about flexing their economic muscles and standing on their own two feet.
And let’s not forget the whole idea of shaking up the global power dynamics. BRICS nations want a world where it’s not just the US calling all the shots. By promoting dedollarization, they’re aiming for a more balanced playing field where everyone’s currency gets a chance to shine.
Plus, using their own currencies more in international trade? That’s just good business sense. It cuts down on those pesky currency exchange costs and makes it easier for them to do business with each other.
So yeah, dedollarization isn’t just about money—it’s about asserting their independence, shaking up the status quo, and making sure everyone knows they’re players in the big economic game.
Next BRICS 2024 summit will take place in Russia’s Kazan region from October 22–24 and this will be taken to the next level.
What you guys think of this and how the global forex market will behave???
De-dollarization by BRICS countries is driven by geopolitical considerations.
Reducing reliance on the US dollar is seen as a way to counterbalance the economic and political influence of the United States. By promoting alternative currencies, BRICS countries seek to create a more multipolar world
Another reason is to avoid sanctions. Countries like Russia have faced economic sanctions from the US and its allies. Reducing dollar dependence can help other countries avoid the impact of such sanctions on their economies.
As new currency pairs become more relevant, trading patterns in the forex market may shift, with increased activity in currencies like the Chinese yuan or regional currencies within the BRICS framework. But the yuan is not even a free-floating currency yet. (Currently, China relies on bilateral currency swap agreements between countries.)
In the near term, the effects of the moves toward de-dollarization are likely to be gradual rather than immediate. Countries aligned with or allied with the US will continue to stick with the dollar, which means the dollar will remain deeply entrenched in global trade and finance for the foreseeable future.
