De-dollarisation, BRICS and the Dollar

Need to look beyond simplistic binaries

Introduction

Earlier this month, former US Congressman Ron Paul in a post on X said:

“the BRICS bloc is preparing its Rio Reset for July, exactly the kind of challenge to dollar hegemony I have predicted for years.”

In another post, Ron Paul points to the expansion of BRICS+ and how it could play a role in the decline of the US dollar. The former Congressman highlights the entry of Saudi Arabia into BRICS+ and how Saudi Arabia signed an agreement with Brazil (which currently holds the chairmanship of BRICS) for accepting payments in Brazil’s currency for purchases of oil.

This is not the first time that Ron Paul has made such a forecast regarding the decline of the US Dollar . On earlier occasions also, he has spoken about the diminishing status of the US Dollar.

Factors which have given a fillip to de-dollarisation

There is no doubt, that “de-dollarisation” or trade in local currencies has witnessed a significant rise in recent years. The key factor for this is the imposition of stringent sanctions by US on Russia – in the aftermath of the Russia-Ukraine war. Paul himself has highlighted “weaponisation” of the dollar as an important reason for the move towards de-dollarisation.

It would be pertinent to point out that China and Russia have been speaking about the dominance of the US dollar and the need for an alternative economic architecture well before the imposition of US sanctions on Russia.

Trade in local currencies, or “de-dollarisation” is not restricted only to BRICS+ members, but several other countries are exploring alternatives

US President Donald Trump has also warned BRICS members that he would impose tariffs on countries going in for “de-dollarisation”. Despite Trump’s threats several countries are not only going in for “de-dollarisation” but also seeking membership of BRICS. In the last two years, the BRICS grouping has expanded to include 6 new countries as members. In 2024, the 5 countries which entered the organisation as members were Egypt, Ethiopia, Iran, Saudi Arabia, and the United Arab Emirates. In 2025, Indonesia had got membership of BRICS

The need for a layered approach vis-à-vis De-dollarisation and BRICS

It is important to have a layered and nuanced approach towards de-dollarisation and the reasons. While countries like China, Russia and Iran may have geopolitical reasons for the same -- given the nature of their relations with the US -- others are doing it as a means of circumventing stringent sanctions imposed by the US. While intra-BRICS trade in non-dollar currencies has witnessed a rise and a common payment system of BRICS member states could gain traction a common BRICS currency is a mere pipe dream.

Several BRICS members while wanting to benefit from the opportunities of the organisation, realise that a BRICS common currency is a pipe dream. India, a founding member of BRICS, has unequivocally distanced itself from the idea of a BRICS Common currency. New Delhi has said that it does not seek to challenge the US Dollar. India’s External Affairs Minister, S Jaishankar while making this point had said:

“We have never actively targeted the dollar. That's not part of either our economic policy or our political or strategic policy,

Given the nature of India’s strained relations with China, the possibility of a BRICS common currency is impossible at least in the short run.

Currently, the US Dollar accounts for well over 50% (58%) of global reserves.

Conclusion

In conclusion, while it is true that countries are seeking to look at alternatives towards the US Dollar, it is important to understand the fact that “de-dollarisation” is not driven solely by geopolitics. It is also important to bear in mind that while the US Dollar’s global status may have reduced to an extent, as has been discussed earlier it is important to have a balanced approach and to write it off despite the Trump administration’s policies and the global uncertainty arising out of the same, is premature and unrealistic.