The BRICS alliance has launched a de-dollarization plan to remove the US dollar from global reserve status and replace it with local currencies. China and Russia toured the world, convincing developing countries to trade in local currencies rather than the US dollar. This has been a success as several developing countries are considering de-dollarization efforts to strengthen their currencies.
The fact that the United States is promoting sanctions against developing countries is another reason why the United States considers a de-dollarization policy to be advantageous.
De-dollarization faces challenges: US dollar dwarfs all currencies of BRICS countries
De-dollarization efforts failed as the US dollar put pressure on all local currencies of BRICS countries. The DXY index, which measures the strength of the US dollar, is showing forex trading around the 106.27 level. This is a significant increase from January’s low of 101.8.
The US dollar destroyed the currencies of BRICS countries one after another and rose to the top position in the foreign exchange market. First, the Chinese yuan has fallen to a five-month low against the US dollar, currently sitting at 7.24 on the chart.
Second, the Indian rupee fell to an all-time low of $83.63 against the US dollar earlier this week. However, it briefly rose on Friday, rising to 83.54. The Russian ruble has finally fallen below 100 rubles against the dollar and currently stands at 94.15 rubles.
The Japanese Yen also suffered greatly from the US dollar, falling to its lowest point since 1990. The weakest currency among them all, the Japanese yen finds it difficult to compete with the US dollar. The pound sterling was also depreciated by the strong dollar, falling to $1.25, a four-month low. In conclusion, despite mounting concerns about de-dollarization, the US dollar is having an unfavorable impact on all of the BRICS local currencies.