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For several years, the BRICS have sought to reduce their dependence on the US dollar through the development of a monetary alternative. However, at the beginning of 2025, the reality of the foreign exchange market eludes them. The dollar is stronger than ever, reaching new heights while the currencies of the bloc collapse. The Indian rupee plummets to a historic low of 85.93, the Chinese yuan weakens, and other local currencies struggle to resist. Despite the efforts of the BRICS to counter the hegemony of the greenback, the current dynamics expose the limits of their de-dollarization strategy and raise questions about the viability of a credible alternative.
The dollar crushes BRICS currencies
The BRICS’ de-dollarization project faces an unforgiving reality: the dollar remains the safe haven for global markets. At the start of the year, the DXY index, which measures the strength of the greenback against a basket of currencies, experienced nine consecutive days of gains, reaching 109.30, close to its all-time high of 109.53. This rise complicates the ambitions of the bloc, which struggles to impose a credible alternative.
The surge of the dollar has immediate repercussions on BRICS currencies. Thus, the Indian rupee collapsed to 85.93 against the dollar, its lowest historical level, and even threatens to cross the 86 mark. The Chinese yuan and the Japanese yen follow the same trajectory, unable to withstand the pressure from the greenback. Despite the BRICS’ efforts to limit their exposure to the dollar, the markets continue to favor the American currency, thereby weakening the emerging currencies.
Several factors explain this dominance of the dollar. The US Department of Labor has released figures that reflect a robust labor market in the United States. Weekly jobless claims fell to 201,000 from 211,000 previously, reinforcing investor confidence. At the same time, Christopher Waller, governor of the Federal Reserve, indicated that inflation is expected to continue declining in 2025, a sign perceived as favorable for the American economy. This combination of indicators stimulates demand for the dollar and relegates BRICS currencies to struggling against a currency that continues to gain attractiveness.
A de-dollarization project in deadlock?
Faced with the uninterrupted rise of the dollar, the BRICS’ de-dollarization project seems to be stalled. Despite regular announcements about the creation of a common currency, no major progress has been made. India, a key member of the bloc, is increasing its dollar reserves, suggesting a loss of confidence in the feasibility of a viable alternative. This strategic choice highlights the internal contradictions within the BRICS, where the economic interests of the members diverge in the face of the dollar’s dominance.
While the bloc aims to reduce its exposure to the dollar, it still struggles to build a credible alternative. The dollar’s hegemony relies on two pillars: its stability and liquidity, advantages that BRICS currencies fail to match. Although some countries have signed bilateral agreements aimed at promoting trade in local currencies, these initiatives remain marginal and do not diminish the dollar’s influence on global trade.
The challenge of de-dollarization goes beyond monetary agreements. Investors and financial institutions continue to favor the dollar due to its long-term reliability. As long as this dynamic persists, the BRICS will struggle to impose an alternative capable of competing with a currency that remains the backbone of the global financial system. To reverse the trend, the bloc will need to propose tangible solutions that can convince the markets that an alternative to the dollar is not only possible but also preferable.
The BRICS’ bet on freeing themselves from the dollar confronts an unyielding reality: the greenback remains the pillar of international trade and continues to attract investors and financial institutions. Despite declared ambitions, the alliance struggles to propose a viable alternative capable of reversing the trend. Without a credible currency, widely adopted and supported by robust financial infrastructure, the dollar will maintain its central role in the global economy. As long as this dependence continues, the BRICS risk remaining on the fringes of the global financial system, rather than redefining its rules.
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Diplômé de Sciences Po Toulouse et titulaire d’une certification consultant blockchain délivrée par Alyra, j’ai rejoint l’aventure Cointribune en 2019.
Convaincu du potentiel de la blockchain pour transformer de nombreux secteurs de l’économie, j’ai pris l’engagement de sensibiliser et d’informer le grand public sur cet écosystème en constante évolution. Mon objectif est de permettre à chacun de mieux comprendre la blockchain et de saisir les opportunités qu’elle offre. Je m’efforce chaque jour de fournir une analyse objective de l’actualité, de décrypter les tendances du marché, de relayer les dernières innovations technologiques et de mettre en perspective les enjeux économiques et sociétaux de cette révolution en marche.
DISCLAIMER
The views, thoughts, and opinions expressed in this article belong solely to the author, and should not be taken as investment advice. Do your own research before taking any investment decisions.
