In the past two years, the global south has taken bold steps toward de-dollarization, championing local currencies to counterbalance Western dominance in global finance. Despite these efforts, the US dollar has remained resilient, even as analysts argue its value is “grossly overvalued.”
Stephen Jen, an economist at Eurizon SLJ, highlighted this disparity in a recent Financial Times article, pointing to Mississippi—America’s poorest state—as a striking example. Remarkably, its per capita income surpasses that of the United Kingdom, France, Italy, and Japan, and nearly rivals Germany. This anomaly, Jen suggests, reflects an overvaluation of the dollar, driven partly by “supersized fiscal programs.” He notes that U.S. gas station managers often earn more than European doctors, underscoring the inflated purchasing power of the greenback.
Amid this backdrop, the BRICS alliance—comprising Brazil, Russia, India, China, and South Africa—has been rallying against the dollar’s dominance. Their efforts aim to create a multipolar financial system, reducing dependence on the U.S. currency. However, the re-election of Donald Trump as U.S. President in 2025 adds a new layer of complexity. Trump’s more assertive economic stance could counter these de-dollarization efforts, as seen in the dollar’s recent strength.
Still, Jen warns of underlying vulnerabilities. The U.S. fiscal posture, bolstered by aggressive spending, may not be sustainable. Without decisive action to reduce its deficit, the overvaluation of the dollar could eventually backfire, leading to significant economic challenges.
For the BRICS alliance, this presents both a challenge and an opportunity. While Trump’s policies may temporarily bolster the dollar, they could also highlight the risks of overreliance on a single currency. As BRICS nations continue developing alternative financial frameworks, the question remains: will this overvaluation accelerate their de-dollarization drive, or will U.S. policy cement the dollar’s dominance for years to come?
Also Read: Is the BRICS Common Currency Plan Over? Latest Statements Cast Doubt on Its Future
2025 stands as a pivotal year in this unfolding geopolitical and economic chess game, with the fate of the global financial system hanging in the balance.
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.