Talk of de-dollarisation has gathered pace, as members of the Brics economic group meet this week in South Africa for a summit, but the US currency is unlikely to lose its crown as the world's international reserve currency.
Members Brazil, Russia, India, China and South Africa are pushing to expand the bloc's membership at the August 22-24 annual leaders’ summit in Johannesburg.
At least 23 countries are said to have expressed an interest in joining the group.
Also on the agenda of the 15th annual summit are talks on greater use of local currencies to settle trade between the countries.
Leaders and financial policymakers of the member states are also scheduled to discuss prospects of a Brics currency, aimed at challenging the dominance of the US dollar and dethroning it as the international reserve currency.
The summit will push to adopt policies that can help Brics increase its political clout in line with its growing economic and financial influence in the world.
“We want to make the Brics very strong politically, very strong financially,” Brazilian President Lula da Silva was reported by Bloomberg as saying.
Growing friction between the US and China, the world's two largest economies, and a divergence of country positions on Russia’s war in Ukraine may provide an impetus for the Brics leadership to push harder to become more influential, economically as well as politically in the global arena.
Despite attempts to rally support against the US dollar, analysts believe the bloc is unlikely to materially dent the dominance of the greenback.
“Overall, whilst any 'Brics+' grouping could bring into question the speed and scale with which member countries adopt commercial and financial systems outside of the US dollars domain, we hold conviction in our previous examination that being fed up with the US dollars dominance is old hat, and it will remain the world’s currency of first resort, in our view,” said Ehsan Khoman, head of commodities, ESG and emerging markets research at MUFG bank.
A combination of the financial sanctions leverage, which the US applies to “shut adversaries’ economies out of the US dollar payments system”, China’s growing status as a competitor to Washington's international supremacy, and the splintering of geopolitical blocs, has prompted much discussion on “the weaponisation of the US dollar”, according to the lender.
The core part of the debate remains whether other currencies can mount a challenge to the still mighty dollar.
China has so far led efforts in that direction and the importance of its currency as a medium of global trade settlements has grown significantly over the past years.
However, neither the yuan, nor for that matter any other currency, has made major inroads into the greenback’s pre-eminent status.
The Standard Chartered Renminbi Globalisation Index (RGI), the UK bank’s proprietary measure of international yuan usage, rose 26.6 per cent in 2022, topping the 18.5 per cent growth recorded in 2021, Standard Chartered said in a report earlier this year.
Last year, 42.1 trillion yuan ($6.1 trillion) worth of China’s cross-border payments and receipts were settled in the country's currency, up 15 per cent from the previous year, marking the fifth straight annual increase, according to data from the Chinese central bank.
The share of yuan settlements, of the total value of goods traded and foreign direct investment, reached 18 per cent and 70 per cent, respectively, with both measures hitting new highs in recent years, according to the report.
At the end of March, China and Brazil reached a deal to trade in their own currencies, ditching the US dollar as an intermediary, the Brazilian government said.
China has similar deals with Russia, Pakistan and several other countries.
“Within Brics, China’s amplification of renminbi swap lines has helped promote the use of its currency in trade and FX reserves, but it’s capital controls and low issuance remain hurdles,” Mr Khoman of MUFG said.
There are several challenges in terms of attaining the top status of the global transaction currency, which include depth of the capital market, trade invoicing and convertible currency management systems.
“King dollar sits serenely on its throne and unrivalled when considering these interlinked factors,” the Japanese lender said in a report in May.
The dollar, which hit 2023 highs in March, is bouncing back from the lows seen in July, and analysts expect the rally to continue deeper into this year.
“The real yields are on the rise again, there is little reason to keep the US dollar on a bearish trend for the months ahead,” Ipek Ozkardeskaya, senior analyst at Swissquote Bank, said in a research note on Tuesday.
“The dollar rally, which started by mid-July should further develop, and there is significant room for further correction before we could technically call the end of the dollar’s bearish trend.”
Paatal Lok season two
Directors: Avinash Arun, Prosit Roy
Stars: Jaideep Ahlawat, Ishwak Singh, Lc Sekhose, Merenla Imsong
Rating: 4.5/5
UAE currency: the story behind the money in your pockets
In numbers: PKK’s money network in Europe
Germany: PKK collectors typically bring in $18 million in cash a year – amount has trebled since 2010
Revolutionary tax: Investigators say about $2 million a year raised from ‘tax collection’ around Marseille
Extortion: Gunman convicted in 2023 of demanding $10,000 from Kurdish businessman in Stockholm
Drug trade: PKK income claimed by Turkish anti-drugs force in 2024 to be as high as $500 million a year
Denmark: PKK one of two terrorist groups along with Iranian separatists ASMLA to raise “two-digit million amounts”
Contributions: Hundreds of euros expected from typical Kurdish families and thousands from business owners
TV channel: Kurdish Roj TV accounts frozen and went bankrupt after Denmark fined it more than $1 million over PKK links in 2013
Biography
Favourite Meal: Chicken Caesar salad
Hobbies: Travelling, going to the gym
Inspiration: Father, who was a captain in the UAE army
Favourite read: Rich Dad Poor Dad by Robert Kiyosaki and Sharon Lechter
Favourite film: The Founder, about the establishment of McDonald's
Killing of Qassem Suleimani
'Dark Waters'
Directed by: Todd Haynes
Starring: Mark Ruffalo, Anne Hathaway, William Jackson Harper
Rating: ****
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Earth under attack: Cosmic impacts throughout history
- 4.5 billion years ago: Mars-sized object smashes into the newly-formed Earth, creating debris that coalesces to form the Moon
- 66 million years ago: 10km-wide asteroid crashes into the Gulf of Mexico, wiping out over 70 per cent of living species – including the dinosaurs.
- 50,000 years ago: 50m-wide iron meteor crashes in Arizona with the violence of 10 megatonne hydrogen bomb, creating the famous 1.2km-wide Barringer Crater
- 1490: Meteor storm over Shansi Province, north-east China when large stones “fell like rain”, reportedly leading to thousands of deaths.
- 1908: 100-metre meteor from the Taurid Complex explodes near the Tunguska river in Siberia with the force of 1,000 Hiroshima-type bombs, devastating 2,000 square kilometres of forest.
- 1998: Comet Shoemaker-Levy 9 breaks apart and crashes into Jupiter in series of impacts that would have annihilated life on Earth.
-2013: 10,000-tonne meteor burns up over the southern Urals region of Russia, releasing a pressure blast and flash that left over 1600 people injured.
New Zealand squad
Tim Southee (capt), Trent Boult (games 4 and 5), Colin de Grandhomme, Lockie Ferguson (games 1-3), Martin Guptill, Scott Kuggeleijn, Daryl Mitchell, Colin Munro, Jimmy Neesham, Mitchell Santner, Tim Seifert, Ish Sodhi, Ross Taylor, Blair Tickner
UAE’s revised Cricket World Cup League Two schedule
August, 2021: Host - United States; Teams - UAE, United States and Scotland
Between September and November, 2021 (dates TBC): Host - Namibia; Teams - Namibia, Oman, UAE
December, 2021: Host - UAE; Teams - UAE, Namibia, Oman
February, 2022: Hosts - Nepal; Teams - UAE, Nepal, PNG
June, 2022: Hosts - Scotland; Teams - UAE, United States, Scotland
September, 2022: Hosts - PNG; Teams - UAE, PNG, Nepal
February, 2023: Hosts - UAE; Teams - UAE, PNG, Nepal
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Rankings
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Killing of Qassem Suleimani
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Director: Laxman Utekar
Cast: Vicky Kaushal, Akshaye Khanna, Diana Penty, Vineet Kumar Singh, Rashmika Mandanna
Rating: 1/5
Red flags
- Promises of high, fixed or 'guaranteed' returns.
- Unregulated structured products or complex investments often used to bypass traditional safeguards.
- Lack of clear information, vague language, no access to audited financials.
- Overseas companies targeting investors in other jurisdictions - this can make legal recovery difficult.
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Courtesy: Carol Glynn, founder of Conscious Finance Coaching
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