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The BRICS alliance’s ambitious de-dollarization agenda has hit a stumbling block in 2025, with the US dollar surging to unprecedented levels in the currency market. Despite efforts by the bloc to curb the dollar’s dominance, the greenback has trampled over local currencies, highlighting the fragility of the de-dollarization initiative.
The US Dollar Index (DXY) has remained in the green for nine consecutive days, reaching 109.30 and edging closer to its all-time high of 109.53. BRICS member currencies, including the Indian rupee, Chinese yuan, and South African rand, have borne the brunt of this upward momentum. The Indian rupee plunged to a lifetime low of 85.93, inching perilously close to the 86 mark, while the yuan and yen grapple with similar lows.
Why the US Dollar is Rising
A series of positive economic indicators from the United States have fueled the dollar’s resurgence. The US Department of Labor reported a sharp decline in weekly Initial Jobless Claims, dropping to 201,000 from 211,000 in early January, signaling a resilient jobs market. Adding to this bullish sentiment, Federal Reserve Governor Christopher Waller forecasted continued declines in inflation throughout 2025, boosting investor confidence in the dollar.
These developments have propelled the US dollar to outperform all other currencies, leaving BRICS economies struggling to maintain parity.
De-Dollarization: A Dream Deferred?
The BRICS bloc, which comprises Brazil, Russia, India, China, and South Africa, had envisioned a world less reliant on the US dollar. However, the dollar’s recent rally underscores the bloc’s inability to counter its strength effectively. Local currencies remain under severe pressure, and the de-dollarization agenda appears increasingly unrealistic.
Also Read: BRICS Nations Iran and Russia Lead the Charge in De-Dollarization, Ditching the US Dollar for Trade
As the US dollar continues its meteoric rise, the alliance faces an uphill battle. The greenback has withstood decades of economic upheavals and challenges, cementing its position as the global reserve currency. Unless BRICS can implement decisive strategies to counter the dollar’s dominance, de-dollarization may remain a distant aspiration.
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.
I’m a crypto enthusiast with a background in finance. I’m fascinated by the potential of crypto to disrupt traditional financial systems. I’m always on the lookout for new and innovative projects in the space. I believe that crypto has the potential to create a more equitable and inclusive financial system.
