It was another week of anti-dollar vituperations as developing and emerging economies under the BRICS group met in Johannesburg South Africa.
Former Nigerian President Chief Olusegun questioned the need for the dollar as the international reserve currency and medium of global trade.
Bloomberg reports the ex-Nigeria leader saying “I want to buy from India. Why should I use dollars? which received a loud cheer in response. Nigeria earns most of its dollars from crude oil sales but in recent times has been facing FX scarcity as a result of rising imports.
Opinions of other leaders
But it was not only the former Nigerian leader who voiced his discontent with the greenback, leaders from Brazil and Russia promoted calls for a move away from the USD and advocated for a new medium of international trade. Russia’s Vladimir Putin said in a recorded speech “The objective, irreversible process of de-dollarization of our economic ties is gaining momentum”
He went further saying the BRICS group would work to achieve the aspirations of the majority of the world’s population.
- He said “We cooperate on the principles of equality, partnership support, and respect for each other’s interests, and this is the essence of the future-oriented strategic course of our association, a course that meets the aspirations of the main part of the world community, the so-called global majority”
Brazil’s Lula Da Silva called for an alternative currency for international trade that doesn’t jeopardize national currencies. He said,
- “I have defended the idea of adopting a reference unit of account for trade, which will not replace our national currencies”
Why anti-dollar rhetoric is getting louder
Experts opined that the revitalized advocacy for a move away from the US dollar was necessitated by the sanctions by the United States government against Russia. Some of the sanctions include freezing Russia’s central bank assets and banning Russian banks from the Society for Worldwide Interbank Financial Telecommunication (SWIFT), the international financial communication system, in February 2022. Hence there is a fear among nations that if they fall out with the West, the fate of Russia will befall them.
Long walk away from the dollar
However, creating an equitable alternative currency for international trade is not an easy task as there are many contentious questions with no easy answers.
- Last month, the Chief financial officer of the New Development Bank (NDB)- a financial institution created by the BRICS group said “The development of anything alternative is more a medium to long term ambition. There is no suggestion right now to create a BRICS currency,”