Why Brics can’t do away with US dollar even as currency cooperation rises

Brazil’s dismissal of the idea of a Brics currency signals that the bloc may continue to pursue less politically fraught monetary cooperation that stops short of challenging the US dollar’s dominance, such as swaps and seamless payment systems, according to analysts. During Brazilian President Luiz Inacio Lula da Silva’s recent trip to India, Lula sought to downplay speculation that the 10-member grouping of developing nations was drafting plans for a shared currency. In an interview with an Indian news channel on Friday, he said “that there has been no proposal, no draft, and no internal discussion to create a Brics currency”. “India and Brazil can trade in their own currencies and do not need to rely on the US dollar for bilateral deals,” Lula added. Speculation about a Brics currency has swirled in the past few years as the push towards dedollarisation continues. During the Brics summit in South Africa in 2023, leaders discussed ways to settle more trade within the bloc without the US dollar. At the bloc’s summit in Brazil in 2025, Russian President Vladimir Putin urged Brics countries to make greater use of their currencies for trade. Then presidential candidate Donald Trump addressed the issue during the 2024 US election campaign, warning Brics countries that he would slap tariffs of up to 100 per cent on their exports to the US if they were to create a rival currency to “replace” the dollar. Lula’s dismissal of a Brics currency has fuelled speculation on what other options the bloc could consider to reduce its reliance on the dollar. A more plausible path is to expand local-currency settlements and swap arrangements between central banks, as well as linking national payment systems, according to analysts. James Chin, director of the Asia Institute at the University of Tasmania, said: “They [Brics members] can do direct payment in their own currencies. The second option is a currency swap, which is already in place. A big currency swap between China and Russia, India and China, or India and Brazil would effectively bypass the US dollar.” The creation of an integrated electronic payment system or a cryptocurrency across Brics could further reduce the bloc’s dependence on the dollar, according to Chin. He also cited wider use of China’s cross-border interbank payment systems as another potential solution. Shanthie Mariet D’Souza, founder and president of the Mantraya Institute for Strategic Studies, said while Russia and China had championed less reliance on the US dollar, there was never a formal proposal by Brics to pursue any proposal to replace it as the main currency for trade. “Iran has also joined this call for its own reasons. However, other members, such as India, Brazil and South Africa, do not support this initiative,” said D’Souza, adding that a Brics currency remained just an idea. D’Souza also cited other stumbling blocks towards a currency union within Brics, including the volatility of the Russian rouble and the Iranian rial, and India’s concerns over the Chinese yuan’s wider acceptance. India, which will host this year’s Brics summit, has emphasised expanding the use of local currencies for trade and linking payment systems. Last month, the Reserve Bank of India suggested linking digital currencies issued by central banks across Brics to facilitate cross-border trade and tourism payments and asked that its proposal be discussed at the 2026 summit, according to media reports. Jhanvi Tripathi, an associate fellow with the Observer Research Foundation’s geoeconomics programme, said broader trade in local currencies was feasible as a hedge against foreign exchange risks. She noted that India and the United Arab Emirates were already trading in local currencies before the UAE joined Brics. The discussions on closer currency cooperation come as trade within the bloc continues to surge. Trade in goods among Brics members jumped from US$84 billion in 2003 to US$1.17 trillion in 2024, according to data from the UN Trade and Development. Brics accounted for 5 per cent of global trade and 20 per cent of trade in the Global South in 2024, the UN agency’s report shows. Aleksei Zakharov, a fellow at ORF’s strategic studies programme, said Brics had been discussing ways to mitigate the risks arising from trade with several of its members facing international sanctions while increasing trade settlements using their respective currencies at the bilateral level, such as between India and Russia. The dominance of the US dollar, however, is set to continue in the foreseeable future, according to Zakharov. Tripathi agreed that the US dollar would likely remain unchallenged for some years to come, even as Brics members worked towards closer currency cooperation. “Within Brics, there are obvious strategic competitions that create hurdles to agreeing on interoperable standards and data transfers. These issues will take a significant amount of time to solve,” she said. Referring to Lula’s comments, Chin said any abrupt shift away from the US dollar was risky given that all Brics countries held substantial reserves denominated in the currency. “They slowly need to change their reserves to non-US dollars. Until it happens, most of them prefer flexibility.”

Why Brics can’t do away with US dollar even as currency cooperation rises

.css-1c6uqr6{color:inherit;font-weight:inherit;font-size:inherit;font-family:inherit;line-height:inherit;overflow-wrap:break-word;}Brazil says there has been no proposal or talks within Brics to create a common currency across the bloc

Brazil says there has been no proposal or talks within Brics to create a common currency across the bloc