- In the past three months, the U.S. dollar has exceeded all 11 BRICS currencies and major commodities, including gold.
- BRICS nations have struggled to challenge the U.S. dollar’s stronghold as the global reserve currency.
BRICS Efforts Insufficient Against The U.S. Dollar’s Ascendancy
In the rapidly shifting landscape of the foreign exchange markets, the U.S. dollar has asserted its dominance, eclipsing all 11 BRICS currencies over the past three months. This comes in light of BRICS nations making concerted efforts to position their local currencies as formidable alternatives to the U.S. dollar’s longstanding global reserve status. Yet, these endeavors seem to have fallen short, with the U.S. dollar showcasing its unparalleled strength.
For clarity, the term “BRICS” refers to an association of five major emerging national economies: Brazil, Russia, India, China, and South Africa. However, the scope of this report extends beyond these five, encapsulating a broader spectrum of currencies attempting to compete with the U.S. dollar.
A closer examination of the data showcases the breadth of the U.S. dollar’s supremacy. Here’s how the BRICS currencies and some others fared against the USD in recent months:
- Brazil (USD/BRL): +5.34%
- Russia (USD/RUB): +8.23%
- India (USD/INR): +1.34%
- China (USD/CNY): +2.30%
- South Africa (USD/ZAR): +5.08%
- Argentina (USD/ARS): +32.07%
- Iran (USD/IRR): +250%
- Ethiopia (USD/ETH): +1,250%
Additionally, the U.S. dollar’s ascendancy was not just limited to currencies. It also overshadowed commodities, most notably gold. Gold’s value against the dollar, represented by the XAU/USD index, plummeted to a six-month low, falling below the significant $1,850 threshold recently. Concurrently, the U.S. dollar’s own index (DXY) soared to 107, hinting at its potential to revisit its 52-week high of 114.
In essence, these developments underscore a crucial narrative: the U.S. dollar, backed by the world’s largest economy and buoyed by investor confidence, remains an indomitable force in the world of finance. Even as BRICS nations and others endeavor to create a diversified forex ecosystem, the U.S. dollar’s stature remains largely unchallenged.