The US Dollar has responded mercilessly to the BRICS and their de-dollarization plans, with the major BRICS currencies dropping on the charts in July 2024. The Chinese Yuan, Indian Rupee, and even the major Asian currency, the Japanese Yen, are struggling to counter the dominance of the US Dollar.
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This development indicates that the BRICS de-dollarization efforts have not yielded any results against the US dollar. Instead, the US dollar is putting pressure on the BRICS currencies in the foreign exchange market. At the close of trading on Friday, the rupee of fellow BRICS member India hit an all-time low of 83.73 against the US dollar.
China, which spearheaded the BRICS de-dollarization movement, has seen its renminbi fall to a seven-month low against the US dollar. The Japanese yen has fallen to a 34-year low and is struggling to gain traction in the foreign exchange market, putting the US dollar in the lead and other local currencies lagging behind.
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BRICS: Why is the US Dollar rising and local currencies falling?
Rising US Treasury yields have helped the dollar reverse course in the market against major local currencies. DXY IndexTracking the movement of the US Dollar shows that the US Dollar is safely above the 104.30 level. While the US Dollar is maintaining its momentum, the same cannot be said for the currencies of the BRICS countries.
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The strength of the US dollar has caused the BRICS currencies to weaken despite attempts to challenge its status as the de facto reserve currency. Moreover, currency investors have been buying the US dollar on dips, solidifying resistance levels and making it harder for the US dollar to rebound.
“The market has become a bit overextended and rising yields have supported the dollar.” “The volatility in the cryptocurrency is a major problem,” said Sean Osborne, chief foreign exchange strategist at . ScotiabankWith President Biden’s term drawing to a close, the outlook for the US dollar will be determined by the next president.
