Brics is a group of 5 world’s 5 big economies that include Brazil, Russia, India, China and South Africa. It was initially formed in 2010 to increase the trade and economic cooperation between these countries.
Sum of these brics countries total GDP is more than $26T. You might think that de-dollarisation is on the way but there is a possibility that it won’t happen.
Why Should you invest in BRICS currencies?
Since, these countries have a high trade volume and high gdp. If these countries do not rely on US dollar then it can bring down the pull on global USD. Which will ultimately decrease little bit value of dollar as compared with current situation.
Also, it will bring up the value of BRICS currencies by increasing demand of BRICS currency.
How to invest in BRICS currencies ?
Since there is no such decided one direct currency so far that will be used in BRICS. Still you can hold any of the currency through forex exchange website.
Top countries with highest GPD in the list are China, Russia and India. So, holding currency from any of these countries can help you pass out dollar depreciation if you think there would be any.
Why There is a need to understand de-dollarisation?
The Finance Minister of south Africa Enoch Godongwana, wants to encourage countries in the New Development Bank (NDB) to use their own currencies more often. This helps protect them from problems caused by changes in foreign exchange rates. It’s not about getting rid of the US dollar (de-dollarisation) but it is about reducing the risks of money value going up and down.
Recently, the US dollar has become stronger compared to money used in developing countries. This happened because of Russia’s actions in Ukraine and the US government making changes to interest rates to control how prices increase (inflation).
As a result, countries that owe money in US dollars are finding it more expensive to pay back their debts.
Minister Godongwana’s idea is to encourage countries to use their own currencies more, so they’re not as affected by these changes. It’s like protecting their finances from unexpected ups and downs.
Purchasing “BRICS dollars” as one would buy traditional currency is not in line with the purpose and structure of the new BRICS currency.
The BRICS member countries remain committed to maintaining their individual currencies for local trade. While the new currency will serve a specific role in the realm of international commerce and finance.
Road to a new BRICS currency is paved with challenges. The dominance of the US dollar remains strong, with nearly 88% of global transactions denominated in it. So trade in US dollar is not going away any soon.