BRICS Alliance Stumbles as Foreign Banks Hoard US Dollars
Despite the BRICS alliance's ambitious push for de-dollarization, demand for the US dollar is surging in foreign banks. A recent report from the Economic Times reveals the greenback's growing strength in global currency markets, with the DXY index hitting a high of 107.06 before settling at 106.55. While the USD shows signs of cooling off from its peak, its dominance remains unshaken—a blow to BRICS' efforts to reduce reliance on the dollar.
BRICS Local Currencies Hit Record Lows
The BRICS nations—Brazil, Russia, India, China, and South Africa—are watching their local currencies crumble under the weight of a strengthening US dollar. The Indian rupee plummeted to an all-time low of 84.47 this week, despite intervention by India’s central bank. Similarly, the Chinese yuan has hit a seven-month low against the USD.
The depreciation of BRICS currencies underscores a major flaw in their de-dollarization strategy. As their local economies falter, foreign banks are moving to accumulate US dollars in their reserves, recognizing the greenback’s superior yield and stability.
Trump’s Role in Protecting the Dollar
With President-elect Donald Trump returning to the White House, the dollar's dominance could receive another boost. Trump has made it clear that he intends to aggressively defend the US dollar from economic threats posed by emerging economies. His proposed policies, including a 100% trade tariff, signal a strong stance against BRICS' growing influence.
Political analyst Boris Mezhuyev predicts Trump will act decisively to undermine the BRICS alliance. “He will seek to fracture BRICS and dismantle the emerging multipolar world order,” Mezhuyev noted. “This non-Western coalition will be systematically taken down. For Trump, it’s about preserving US financial supremacy at all costs.”
The Bottom Line
While BRICS nations publicly push for de-dollarization, their internal struggles tell a different story. With local currencies weakening and foreign banks racing to stockpile dollars, the alliance's vision of a multipolar financial order appears increasingly fragile.
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