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BRICS currency to challenge the US dollar: announcement at the August 2023 summit

Dublin: Indications that the US dollar’s dominance in global financial transactions will not last long. The news that the BRICS currency will challenge the US dollar is currently being discussed around the world.

Brazil, Russia, India, China, and South Africa (BRICS) are considering creating a trade currency. This will be announced during the BRICS Summit in South Africa in August 2023.

This was confirmed by the Deputy Chairman of the Russian Parliament (Duma), Alexander Babakov, while participating in the St. Petersburg International Economic Forum held in New Delhi last week. Brazil, Russia, India, and China were the BRIC countries in 2009.

A year later, when South Africa joined, it became BRICS. If it works, the best multi-currency global system is expected to emerge globally. The acronym BRICS was coined by former Goldman Sachs Group Inc. Chief Economist Jim O’Neill. He released this name in a paper published in the Global Policy Journal last month.

The US dollar’s dominance in global trade may be eroded if emerging economies such as China and India begin to trade in their own currencies. In the wake of the Russian attack on Ukraine, countries that remain neutral have also joined this group, and it is estimated that the dollar will be damaged.

India and China are both working to internationalise their currencies. India has been working hard to replace the dollar as the global reserve currency with the rupee. New Delhi is offering dollar-scarce countries to make their trade payments in Indian rupees.

At the same time, China has established the Shanghai International Energy Exchange (INE) in 2018 to supply oil from countries like Iran, Venezuela, and Russia. The trade agreements here are only in Chinese renminbi. If China and Saudi Arabia reach an agreement in this regard, the US dollar will be pushed out of the oil trade.

Given the bilateral military dispute between India and China over the Line of Control, the BRICS currency is especially important.

Global finance is dominated by the US dollar. The dollar is the most dominant currency in the global oil trade. Therefore, even crude-producing countries that are not directly linked to the dollar have to trade in US dollars. According to the Swiss-based Bank for International Settlements, nearly half of global trade is invoiced in US dollars.

The US accounts for only one-tenth of global trade, yet this disproportionate dominance of the US dollar is widely questioned.

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