The BRICS bloc, comprising Brazil, Russia, India, China, and South Africa, has embarked on a resolute mission to reduce global dependence on the US dollar, signaling a significant acceleration of its de-dollarization plans in the upcoming year.
With the recent expansion announcement and a growing emphasis on local currency usage, BRICS is poised to make substantial strides toward achieving its goal. Here are the key factors that are expected to drive the BRICS de-dollarization agenda in 2024.
US Dollar’s Anticipated Retreat in 2024
The primary catalyst for BRICS’ intensified push toward de-dollarization in 2024 is the projected performance of the US dollar.
According to a recent report by ING analysts, the US dollar is likely to recede in the coming year, aligning with the aspirations of the BRICS nations.
The report suggests that “tighter interest rates will finally catch up with the US economy next year,” potentially leading to a decline in the value of the dollar.
Additionally, the report predicts that a looming US recession could mark the beginning of the “dollar’s long goodbye.” These factors create an opportune environment for BRICS to advance its efforts to promote the use of local currencies within the bloc.
Chris Turner, Global Head of Markets, echoed this sentiment, stating that 2024 could provide relief for currencies that have been overshadowed by the dominance of the US dollar.
“We think 2024 will be a year in which currencies and the rest of the world can break after being dominated by the strong dollar trend for so long,” Turner emphasized. This potential dollar retreat aligns favorably with BRICS’ de-dollarization objectives.
BRICS Currency Poised for the Spotlight
At the 2023 annual summit of BRICS, the bloc extended invitations to six additional countries, including economic powerhouses like Saudi Arabia and the United Arab Emirates (UAE), as well as emerging economies such as Ethiopia and Egypt.
This expansion is expected to bolster BRICS’ efforts to reduce the global dominance of the US dollar. As the upcoming 2024 summit, hosted by Russia, draws near, speculations are rife that BRICS may unveil its own currency.
Russia has long championed the idea of a BRICS currency, and the summit could serve as the ideal platform to introduce this transformative financial instrument to the world.
Such an announcement would carry profound geopolitical implications, especially in the context of the expected downturn of the US dollar.
As the global balance of power continues to shift, the introduction of a BRICS currency and the anticipated decline of the US dollar would likely reinforce each other, further expediting the de-dollarization efforts already in motion.
A Confluence of Factors Propelling De-Dollarization
The acceleration of de-dollarization within BRICS is expected to be catalyzed by the interplay of several key factors. Notably, the official expansion of the bloc, as announced at the 2023 summit, will take full effect in 2024.
This formalization of the expanded alliance is anticipated to engender positive sentiment and solidarity among member nations, strengthening their collective resolve to reduce reliance on the US dollar.
Additionally, the economic fortunes of two BRICS powerhouses, Russia and Saudi Arabia, are poised for a resurgence in the oil market. This sector’s recovery is expected to contribute positively to the multipolar balance of global economic power.
As these developments unfold, countries worldwide are likely to observe a growing momentum away from the US dollar, with many nations already taking steps in this direction throughout the rest of this year and next year.
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