De-Dollarization Movement to Gain Traction: ING Bank Analysis
According to ING Bank analysts, the de-dollarization movement initiated by BRICS countries is expected to gain momentum. The upcoming BRICS summit in Johannesburg is likely to serve as a catalyst for this growth, as the bloc contemplates adding more countries. Here are the key points:
- The subject of ‘de-dollarization’ may gain traction when senior leaders of BRICS nations meet at the summit.
- Several countries, including Saudi Arabia, Argentina, and Venezuela, are seeking to join the BRICS group.
- There is currently no framework for adding new members, but discussions are expected to take place during the summit.
- The Chinese yuan could play a significant role in the de-dollarization strategy of the China-led bloc.
- Countries like Brazil, Russia, and India have already started using the yuan for settlements and trade agreements.
While the yuan is gaining momentum, it still lacks attractiveness for bond investors due to concerns over liquidity and potential capital controls. Nevertheless, the USD is being gradually replaced by Asian currencies, particularly the yuan and the Japanese yen, in central banks’ international reserves.
Hot Take
The de-dollarization movement led by BRICS countries is likely to continue growing, with the upcoming summit serving as a platform for discussions on adding new members. The Chinese yuan is playing a crucial role in this shift away from the US dollar, although it still faces challenges in attracting bond investors. As Asian currencies gain prominence, the USD is being gradually replaced in international reserves. This trend reflects a shift in global economic dynamics, with potential implications for the cryptocurrency market.
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