Over the past two years, the global south has spearheaded a de-dollarization movement, seeking to reduce reliance on the US dollar and promote local currencies. The BRICS alliance—comprising Brazil, Russia, India, China, and South Africa—has been at the forefront of this initiative, aiming to combat Western dominance in global finance. However, despite these efforts, the US dollar has retained its global strength.
A recent analysis from Stephen Jen of Eurizon SLJ suggests that the dollar’s dominance may be artificially inflated. Jen labeled the US dollar “grossly overvalued,” pointing to disproportionate economic disparities between the United States and other developed nations. Notably, Mississippi, the poorest US state, boasts a higher per capita income than countries like the UK, France, and Japan.
Jen attributes this anomaly to America’s “supersized fiscal program,” which has created an unsustainable fiscal posture. Highlighting the stark contrast, he noted that gas station managers in the US often earn more than European doctors, underscoring the dollar’s inflated value relative to its purchasing power abroad.
As 2025 unfolds, the geopolitical and economic landscape is set to shift significantly. The return of Donald Trump to the White House introduces uncertainties for the BRICS alliance. Unlike his predecessor, Trump is less likely to passively observe the bloc’s de-dollarization efforts. Paradoxically, his policies have strengthened the dollar, amplifying the challenges faced by BRICS nations.
The question remains: will the US fiscal imbalance catalyze the success of BRICS’ de-dollarization strategy? Jen warns that without significant efforts to address the deficit, the US could face major economic upheavals. For BRICS, this presents an opportunity to advance their initiatives.
Also Read: BRICS Alliance’s Push for New Currency Faces Internal Divisions: Will It Challenge the US Dollar?
As the global south seeks to redefine financial power structures, the overvaluation of the US dollar could serve as a catalyst for change. Whether this shift materializes depends on the strategies adopted by both the US administration and the BRICS bloc in the coming years.
Disclaimer: The information in this article is for general purposes only and does not constitute financial advice. The author’s views are personal and may not reflect the views of Chain Affairs. Before making any investment decisions, you should always conduct your own research. Chain Affairs is not responsible for any financial losses.
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