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Why de-dollarization discussions are more talk, less action
CNBC reports that at the BRICS summit leaders renewed calls to expand intra-BRICS trade in local currencies to reduce reliance on the US dollar, but experts doubt the bloc can overcome major hurdles such as lack of shared infrastructure and macroeconomic trust.
At the BRICS summit over the weekend, leaders reiterated the bloc’s desire to expand trade settlement using local currencies rather than relying on the US dollar. CNBC links the motivation to geopolitical tensions, sanctions risk and US tariff policy, with leaders and officials arguing that the current system is exposed to political shocks because it is concentrated in a limited set of currencies.
The article notes that two of the most traded commodities, oil and gold, are denominated in dollars, and cites BIS data showing the dollar’s share of the forex market at 89% (as of April). It also quotes BRICS officials calling for stronger cross-border payment systems and deeper financial interconnectivity, particularly emphasising the need for BRICS payment, settlement and depository infrastructure given sanctions constraints faced by members such as Iran and Russia.
At the same time, CNBC reports scepticism from experts that BRICS can “wean away” from the dollar quickly. The piece points to hurdles including limited intra-BRICS trade scale (citing that it is about 5% of world trade as of 2024) and the lack of unified institutional and macroeconomic infrastructure, alongside distrust between key members such as China and India. It therefore frames the effort as “baby steps”, with more discussion than concrete implementation.
For FX traders, the key watch-items are whether any agreements move beyond declarations into operational settlement and payment infrastructure, and whether intra-BRICS trade in local currencies visibly grows from its current small share.
Why this matters for FX
The story matters for FX insofar as it highlights whether and how quickly participants could reduce dollar dominance in trade and payments. If BRICS members expand local-currency settlement, it could gradually change demand for USD liquidity and shift how sanctions and tariff risks transmit to FX markets, particularly for USD-heavy trading partners. However, the article also stresses constraints (limited intra-BRICS trade share, insufficient institutional/financial infrastructure, and distrust), which makes the immediate macro and FX impact more uncertain than the rhetoric suggests.