An economic grouping originally of Brazil, Russia, India, China, and South Africa, expanded in 2024 to include additional members. BRICS represents an alternative to Western-dominated financial institutions and has implications for de-dollarization.
What BRICS Is
BRICS began as an acronym coined by Goldman Sachs in 2001 (originally BRIC, without South Africa) to describe the largest emerging market economies. It evolved into a formal grouping with annual summits. In 2024, membership expanded to include Egypt, Ethiopia, Iran, Saudi Arabia, and the UAE, significantly increasing the bloc's economic weight and energy market influence.
BRICS and Currency Markets
BRICS nations have increasingly pursued De-dollarization initiatives, including bilateral trade settlements in local currencies, development of alternative payment systems, and discussions about a potential BRICS common currency or settlement unit. China and Russia have expanded yuan-ruble trade settlements, and India has promoted rupee-based trade with select partners.
The New Development Bank (NDB), established by BRICS in 2014, provides development financing as an alternative to the World Bank and International Monetary Fund (IMF), lending in member currencies to reduce dollar dependence.
Forex Implications
Traders watch BRICS developments for long-term trends affecting the U.S. Dollar (USD) and the Chinese Yuan (CNY/CNH). While a BRICS common currency remains unlikely in the near term, increased local-currency trade among members gradually reduces dollar transaction volumes.
Related Terms
G20 (Group of Twenty)
An international forum of 19 countries plus the European Union and African Union representing the largest economies. The G20 addresses global economic issues including exchange rate policies, financial regulation, and trade.
De-dollarization
The process of reducing dependence on the U.S. dollar in international trade, reserves, and financial transactions. De-dollarization efforts by countries like China and Russia could gradually alter global currency dynamics.
International Monetary Fund (IMF)
An international organization of 190 member countries that promotes global monetary cooperation, financial stability, and economic growth. The IMF provides loans to countries in financial distress and monitors global exchange rate policies.
Currency Basket
A weighted collection of selected currencies used to measure the value of another currency or to peg an exchange rate. The U.S. Dollar Index (DXY) and IMF Special Drawing Rights (SDR) are examples of currency baskets.
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