What Is A BRICS Currency and Is the U.S. Dollar In Trouble?  

• Brazil's President called on Wednesday for the BRICS nations to create a common currency for trade and investment, to reduce their vulnerability to dollar exchange rate fluctuations.
• Brazil's president does not believe nations that do not use the dollar should be forced to trade in the currency, and he has also advocated for a common currency in the Mercosur bloc of South American countries. A BRICS currency "increases our payment options and reduces our vulnerabilities," he told the summit's opening plenary session.
• Building a BRICS currency would be a "political project", South African central bank governor Lesetja Kganyago told a radio station in July. "If you want it, you'll have to get a banking union, you'll have to get a fiscal union, you've got to get macroeconomic convergence," Kganyago said. "Importantly, you need a disciplining mechanism for the countries that fall out of line with it; plus they will need a common central bank, where does it get located?"
• BRICS leaders have said they want to use their national currencies more instead of the dollar, which strengthened sharply last year as the Federal Reserve raised interest rates and Russia invaded Ukraine, making dollar debt and many imports more expensive.
• The greenback's share of official FX reserves fell to a 20-year low of 58% in the final quarter of 2022, and 47% when adjusted for exchange rate changes, according to International Monetary Fund data.
• However, the dollar still dominates global trade. It is on one side of almost 90% of global forex transactions, according to Bank of International Settlements Data. De-dollarising would need countless exporters and importers, as well as borrowers, lenders and currency traders across the world, to independently decide to use other currencies.

(Source: Reuters)