Dollar's global dominance likely to persist despite BRICS expansion.

Dollar's global dominance likely to persist despite BRICS expansion.


At a recent summit in Johannesburg, the BRICS leaders extended invitations to Iran, Argentina, Saudi Arabia, the United Arab Emirates (UAE), Ethiopia, and Egypt to join the group.



During a summit held in Johannesburg, the leaders of the BRICS nations, which include Brazil, Russia, India, China, and South Africa, took a significant step by inviting several other countries to join their group. These new invitees include Iran and Argentina, along with Saudi Arabia, the United Arab Emirates (UAE), Ethiopia, and Egypt. This expansion reflects the growing influence and collaboration among these nations on the global stage.


According to a note from BNY Mellon, the dollar's position as the global reserve currency is expected to remain secure for the foreseeable future, despite the expanding influence of the BRICS group of developing nations posing a challenge to the dollar's dominance in the world economy.



Addition to the recent summit in Johannesburg, the BRICS leaders, representing Brazil, Russia, India, China, and South Africa, extended invitations to Iran, Argentina, Saudi Arabia, the United Arab Emirates (UAE), Ethiopia, and Egypt to join their ranks. BNY Mellon noted in a report published on September 1 that one of the BRICS' objectives is to explore alternatives to the dollar. The report suggested that the inclusion of Iran, the UAE, Egypt, and Saudi Arabia would make this new coalition a major player in energy exports, particularly oil, potentially paving the way for a commodity basket backed by gold and oil from this emerging group.





BRICS Expansion and De Dollarization 


The recent BRICS summit held in South Africa emphasized the inevitable process of de-dollarization and the expansion of the BRICS group, comprising Brazil, Russia, India, China, and South Africa. Starting from January next year, an additional six countries will join BRICS, and there is a growing interest from dozens of other nations to become part of this coalition.


When Iran, Saudi Arabia, and the United Arab Emirates join BRICS next year, coinciding with a US presidential election year, it could mark significant steps towards reducing the dominance of the petrodollar. The summit promoted the increased use of member nations' currencies for trade settlements, and the Saudis have already expressed openness to non-US dollar settlements for oil transactions.


Considering that most major oil-producing nations will be part of the expanded BRICS, their collective influence on the Organization of Petroleum Exporting Countries Plus (OPEC+) is expected to be substantial.




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