The US Dollar is Soaring: BRICS in Difficulty!
In July, the US dollar dealt a severe blow to the currencies of BRICS member countries. Despite these nations’ efforts to reduce their reliance on the dollar, it continues to strengthen.
The relentless assault of the dollar on local currencies
Despite an active campaign of de-dollarization launched by the BRICS, the US dollar continues to dominate the foreign exchange markets. The greenback, a symbol of stability and security, recorded a significant increase last month, causing a dramatic decline in local currencies.
The impact was particularly felt by the Indian rupee, which hit a historic low of 83.74 at market close on Friday. The Chinese yuan also reached a seven-month low, while the Japanese yen is at its lowest level since the 1990s.
Anil Bhansali, Executive Director of Finrex Treasury Advisors, commented: “Dollar buying will continue. The rupee is expected to depreciate to 83.84 per dollar in the next two days.” These forecasts are based on increased demand for the dollar, leaving little room for stabilization of local currencies.
Growing pressure on BRICS economies
The worsening situation for BRICS currencies highlights the challenges faced by these economies in the face of dollar hegemony. The rise of the US dollar increases pressure on these countries, thwarting their de-dollarization efforts. Local currencies, already weakened, continue to depreciate as demand for the dollar persists.
Analysts observe that BRICS currencies could remain under pressure in the short term. This situation could limit economic opportunities for these countries, slowing their growth and complicating their efforts to diversify their foreign exchange reserves. Medium-term prospects suggest that BRICS will need to reassess their economic strategies to counter the dominant influence of the dollar.
In summary, the continuing rise of the US dollar highlights the vulnerability of BRICS nations’ currencies in the face of an omnipresent global currency. Although de-dollarization has been a long-term goal for these countries, recent developments show that this process may be more complex than anticipated. The future economic stability of BRICS will depend on their ability to adapt their economic strategies in the face of this ongoing pressure.
