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The Star
5 days ago
- Business
- The Star
Does the BRICS currency threaten the dollar?
Some people may be wondering why the US President has been acting out in recent months, threatening to impose tariffs, at times in a seemingly excessive manner. Economists and political analysts suggest that one of the main reasons for Trump's economic rhetoric is the United States' concern that BRICS countries are initiating a strategic plan to undermine the dollar, a process some observers refer to as "de-dollarisation''. The BRICS grouping includes Brazil, Russia, India, China, and South Africa and a few other countries that joined in the past couple of years. It all started in Kazan, Russia, during the 16th BRICS summit last year when these countries unveiled a symbolic BRICS banknote, unleashing hot debate regarding the US dollar's dominance. At the time, Russian President Vladimir Putin emphasised that the dollar is being used as a ''weapon.'' A year before, meanwhile, Brazilian President Luiz Inácio Lula da Silva proposed creating a new, common currency in South America to reduce its reliance on the dollar in international trade. India has also been advocating for local currency settlements among BRICS nations. The unveiling of the BRICS currency bill, featuring the Taj Mahal, added controversy, as the bloc explores challenging the US dollar's global financial power. Despite research showing that the US dollar remains the primary reserve currency, Trump would take none of that as he continued his criticism of BRICS. "We are going to require a commitment from these seemingly hostile countries that they will neither create a new BRICS currency, nor back any other currency to replace the mighty US dollar or, they will face 100% Tariffs,'' he wrote in his Social Truth platform in January. The statement was similar to the one he posted last November. According to Bloomberg, Brazil and South Africa have criticised Trump separately for his anti-BRICS comments, while India has refrained from responding publicly, signalling that it is walking a fine line in maintaining its relationship with Washington. Would a BRICS currency threaten the dollar? Political analyst Anda Mbikwana offers his insights on the issue. 'The unveiling of a symbolic BRICS banknote at the St. Petersburg International Economic Forum represents far more than ceremonial posturing — it signals a deliberate escalation in the bloc's strategy to construct alternative financial architectures that could fundamentally reshape global monetary dynamics. ''While critics may dismiss this $200 denomination note as mere symbolism, the careful design choices reveal sophisticated strategic thinking. The front's display of founding member flags alongside the reverse featuring partner nations creates a visual narrative of expanding multipolarity that directly challenges the hierarchical nature of the dollar-dominated system. ''This imagery reinforces BRICS' positioning as what President Putin has characterised as 'non-western' rather than 'anti-western' — a crucial distinction that broadens its appeal across the Global South.'' The Technological Infrastructure Behind De-dollarisation ''The symbolic banknote masks more substantive developments in BRICS' financial infrastructure. Russia's emphasis on blockchain-based payment systems and central bank digital currencies represents a technologically sophisticated approach to circumventing traditional dollar-denominated channels. ''These systems offer practical alternatives to SWIFT and correspondent banking relationships that have become increasingly weaponised through sanctions regimes.'' And how does this directly affect South Africa, one might ask. Said Mbikwana: ''For South Africa, this development presents both opportunities and challenges. Greater financial integration within BRICS could reduce transaction costs and currency exposure risks in trade with major partners. ''However, it also requires careful navigation of relationships with Western economies that remain crucial for South African exports and investment. The Reserve Bank's approach to central bank digital currency development will become increasingly strategic as these alternative payment systems mature.'' According to Mbikwana, despite BRICS' banknote symbolic significance, fundamental economic realities limit BRICS' ability to quickly displace dollar dominance. ''The United States retains unparalleled capital market depth, institutional credibility, and network effects that have historically proven resilient to challengers. Moreover, internal coordination challenges within BRICS — particularly between China and India — limit the bloc's ability to present a unified monetary alternative.'' The BRICS symbolic banknote, added Mbikwana, should be understood not as an immediate threat to dollar hegemony, but as a manifestation of longer-term structural shifts in global economic governance. ''Its significance lies not in its current form, but in its representation of institutional momentum toward financial multipolarity. ''American opposition to these developments may paradoxically accelerate their adoption by reinforcing perceptions of dollar weaponisation among emerging economies. ''The ultimate question is not whether BRICS can immediately supplant the dollar, but whether it can create sufficient institutional alternatives to reduce the international community's dependence on dollar-denominated systems. In this context, symbolic gestures serve as important markers of political will and institutional capacity — prerequisites for any serious challenge to existing monetary hierarchies.'' The purpose of the banknote will serve as a payment system designed to facilitate transactions within the BRICS bloc using local currencies and potentially central bank digital currencies. While a BRICS currency could potentially challenge the US dollar's dominance, it's unlikely to replace it entirely soon . There is ongoing development and testing, with a pilot programme potentially appearing before the end of 2026. Some economists are criticising Trump for threatening the BRICS, according to a CBS News report, saying it makes the US look weak. "It isn't a good look, as it indirectly elevates the stature of a non-threat and suggests a lack of confidence in the dollar," Brad Setser, a senior fellow at the Council on Foreign Relations and former Treasury Department economist, wrote on X.
IOL News
5 days ago
- Business
- IOL News
Does the BRICS currency threaten the dollar?
According to economists and political analysts, one of the main reasons for Trump's economic rhetoric has to do with US fears that BRICS countries are embarking on a strategic plan to dethrone the dollar, or de-dollarise the world, as some observers put it. Some people may be wondering why the US President has been acting out in recent months, threatening to impose tariffs, at times in a seemingly excessive manner. Economists and political analysts suggest that one of the main reasons for Trump's economic rhetoric is the United States' concern that BRICS countries are initiating a strategic plan to undermine the dollar, a process some observers refer to as "de-dollarisation''. The BRICS grouping includes Brazil, Russia, India, China, and South Africa and a few other countries that joined in the past couple of years. It all started in Kazan, Russia, during the 16th BRICS summit last year when these countries unveiled a symbolic BRICS banknote, unleashing hot debate regarding the US dollar's dominance. At the time, Russian President Vladimir Putin emphasised that the dollar is being used as a ''weapon.'' A year before, meanwhile, Brazilian President Luiz Inácio Lula da Silva proposed creating a new, common currency in South America to reduce its reliance on the dollar in international trade. India has also been advocating for local currency settlements among BRICS nations. The unveiling of the BRICS currency bill, featuring the Taj Mahal, added controversy, as the bloc explores challenging the US dollar's global financial power. Despite research showing that the US dollar remains the primary reserve currency, Trump would take none of that as he continued his criticism of BRICS. "We are going to require a commitment from these seemingly hostile countries that they will neither create a new BRICS currency, nor back any other currency to replace the mighty US dollar or, they will face 100% Tariffs,'' he wrote in his Social Truth platform in January. The statement was similar to the one he posted last November. According to Bloomberg, Brazil and South Africa have criticised Trump separately for his anti-BRICS comments, while India has refrained from responding publicly, signalling that it is walking a fine line in maintaining its relationship with Washington. Would a BRICS currency threaten the dollar? Political analyst Anda Mbikwana offers his insights on the issue. 'The unveiling of a symbolic BRICS banknote at the St. Petersburg International Economic Forum represents far more than ceremonial posturing — it signals a deliberate escalation in the bloc's strategy to construct alternative financial architectures that could fundamentally reshape global monetary dynamics. ''While critics may dismiss this $200 denomination note as mere symbolism, the careful design choices reveal sophisticated strategic thinking. The front's display of founding member flags alongside the reverse featuring partner nations creates a visual narrative of expanding multipolarity that directly challenges the hierarchical nature of the dollar-dominated system. ''This imagery reinforces BRICS' positioning as what President Putin has characterised as 'non-western' rather than 'anti-western' — a crucial distinction that broadens its appeal across the Global South.'' The Technological Infrastructure Behind De-dollarisation ''The symbolic banknote masks more substantive developments in BRICS' financial infrastructure. Russia's emphasis on blockchain-based payment systems and central bank digital currencies represents a technologically sophisticated approach to circumventing traditional dollar-denominated channels. ''These systems offer practical alternatives to SWIFT and correspondent banking relationships that have become increasingly weaponised through sanctions regimes.'' And how does this directly affect South Africa, one might ask. Said Mbikwana: ''For South Africa, this development presents both opportunities and challenges. Greater financial integration within BRICS could reduce transaction costs and currency exposure risks in trade with major partners. ''However, it also requires careful navigation of relationships with Western economies that remain crucial for South African exports and investment. The Reserve Bank's approach to central bank digital currency development will become increasingly strategic as these alternative payment systems mature.'' According to Mbikwana, despite BRICS' banknote symbolic significance, fundamental economic realities limit BRICS' ability to quickly displace dollar dominance. ''The United States retains unparalleled capital market depth, institutional credibility, and network effects that have historically proven resilient to challengers. Moreover, internal coordination challenges within BRICS — particularly between China and India — limit the bloc's ability to present a unified monetary alternative.'' The BRICS symbolic banknote, added Mbikwana, should be understood not as an immediate threat to dollar hegemony, but as a manifestation of longer-term structural shifts in global economic governance. ''Its significance lies not in its current form, but in its representation of institutional momentum toward financial multipolarity. ''American opposition to these developments may paradoxically accelerate their adoption by reinforcing perceptions of dollar weaponisation among emerging economies. ''The ultimate question is not whether BRICS can immediately supplant the dollar, but whether it can create sufficient institutional alternatives to reduce the international community's dependence on dollar-denominated systems. In this context, symbolic gestures serve as important markers of political will and institutional capacity — prerequisites for any serious challenge to existing monetary hierarchies.'' The purpose of the banknote will serve as a payment system designed to facilitate transactions within the BRICS bloc using local currencies and potentially central bank digital currencies. While a BRICS currency could potentially challenge the US dollar's dominance, it's unlikely to replace it entirely soon. There is ongoing development and testing, with a pilot programme potentially appearing before the end of 2026. Some economists are criticising Trump for threatening the BRICS, according to a CBS News report, saying it makes the US look weak. "It isn't a good look, as it indirectly elevates the stature of a non-threat and suggests a lack of confidence in the dollar," Brad Setser, a senior fellow at the Council on Foreign Relations and former Treasury Department economist, wrote on X.
Mint
09-07-2025
- Business
- Mint
Trump slashes tariffs for Sri Lanka, Philippines
New Delhi: US President Donald Trump on Wednesday slashed tariffs for Sri Lankan goods to 30% from 44% previously as he unveiled his latest list of nations targeted with revised duties. Nations on his list also included the Philippines, Brunei, Moldova, Algeria, Iraq, and Libya under his 'reciprocal tariff' framework. The Philippines, which was earlier slated to face a 27% tariff under the 2 April announcement, will now face a reduced duty of 20% starting 1 August, according to the White House's latest tariff notification issued to the countries concerned. In the case of India, the proposed trade deal is still awaiting final approval from Trump and is likely to be announced by mid-July, as reported by Mint on Tuesday. Indian officials said certain sticking points remain unresolved, and this has contributed to the delay. Under the revised list, Brunei and Moldova will now face a 25% tariff, while Algeria, Iraq, and Libya will each be subjected to a 30% levy. These changes are part of a broader programme aimed at addressing what Trump has frequently described as 'imbalanced and unfair market access' for American exports. This follows an earlier revision in early July, when tariff rates were modified for 14 countries including Vietnam, Japan, South Africa, Malaysia, Indonesia, Cambodia, Thailand, and Bangladesh, among others. In most cases, duties were lowered from the originally announced 2 April-levels, reflecting the outcomes of backchannel negotiations and bilateral engagements. Trump announced the revised tariffs through letters posted on his social media platform, Social Truth. Among the hardest hit were Laos and Myanmar, which now face duties as high as 40%. Thailand retained its 36% rate from April, while Cambodia's tariff was reduced slightly to 36% from 49%. Bangladesh's rate was cut to 35% from 37%, while Indonesia's tariff remained unchanged at 32%. In contrast, Malaysia saw a one percentage point increase to 25%. Japan and South Korea were each newly assigned 25% tariffs. Others impacted in the last round include Bosnia (30%), Serbia (35%), Tunisia (25%), Kazakhstan (25%), and South Africa (30%). While Trump's original executive order had announced steep duties of up to 50% on nearly two dozen countries, the administration has since taken a staggered approach—combining tariff enforcement with space for diplomatic negotiations. With the latest adjustments, the list of countries facing updated reciprocal tariffs under Trump's trade plan continues to grow. Trade experts believe the reduction in the Philippines' tariff to 20% signals a possible strategic shift by Washington to preserve key Indo-Pacific partnerships while still pushing for improved trade terms. In contrast, the 30% duties imposed on Algeria, Iraq, and Libya—countries with limited bilateral trade—are seen largely as symbolic of Trump's harder stance. The revised tariffs will come into effect on 1 August, coinciding with the end of the 90-day suspension that was introduced in April to allow for trade negotiations. The US has yet to announce final tariff decisions for a handful of key partners, including India, as talks remain ongoing.
Mint
08-07-2025
- Business
- Mint
Trump slaps new tariffs on dozen countries as India-US trade deal awaits final nod
NEW DELHI : US President Donald Trump has announced a sweeping set of new tariffs, effective 1 August, on imports from more than a dozen countries, including key Asian economies such as Thailand, Cambodia, Bangladesh, Indonesia, Malaysia, Japan, and South Korea. India, notably, remains off the list—for now—amid ongoing negotiations over a bilateral trade agreement (BTA), which remains unsigned on the President's desk. Tariff breakdown: Asia hit hardest Trump announced the tariffs through letters posted on his social media platform Social Truth. Laos and Myanmar were hit the hardest, facing duties up to 40%. Thailand retained its 36% duty from April, while Cambodia saw a slight reduction to 36% from 49%. Bangladesh's rate dropped to 35% from 37%, and Indonesia held steady at 32%. Malaysia's duty rose by 1% to 25%, while both Japan and South Korea were slapped with new 25% tariffs. Non-Asian countries also affected include Bosnia (30%), Serbia (35%), Tunisia (25%), Kazakhstan (25%), and South Africa (30%). Also read: 'US close to trade deal with India', Donald Trump announces amid new tariffs on 14 countries India holds its ground—for now India, which has offered multiple trade concessions to the US in recent months, was conspicuously absent from the tariff list. This gives the country a pricing edge in labour-intensive sectors like textiles, apparel, electronics, and toys, where its Asian competitors now face stiffer duties. 'As these rival exporters contend with steeper duties, Indian products are likely to gain a pricing edge, offering a strategic opening for Indian manufacturers to expand their footprint in the US and attract greater sourcing attention from American buyers," said Ajay Sahai, director general, Federation of Indian Export Organisations (FIEO). The tariff hike comes just 48 hours before the 9 July deadline for the 90-day pause on Trump's Reciprocal Tariff Policy expires. While the US Trade Representative (USTR) has cleared the draft India-US trade deal, the final sign-off awaits Trump's approval. Indian officials say the agreement is unlikely to be concluded without top-level political intervention, especially on contentious issues like agriculture, dairy, and genetically modified seeds. The move, detailed through tariff letters signed by Trump and posted on his social media platform, Social Truth, comes just as the much-awaited India-US Bilateral Trade Agreement (BTA) remains unsigned and pending on the President's desk. 'The deal is ready on paper, but it's now a political call," a government official said. 'If it's not signed in time, some Indian products with strong export interest may be kept out, and the same could apply to US goods. These could be taken up in later phases." Indian negotiators remain cautiously optimistic that if the 9 July deadline is missed, it could be extended to 1 August—buying time for the trade deal. Until then, India is expected to be spared from a direct tariff blow. Also read: Donald Trump announces 25% tariffs on imports from Japan and South Korea, warns against retaliation Trump's statement 'Large and persistent US trade deficits pose an extraordinary threat to our national security and economy," Trump said in an executive order. 'The 90-day suspension of additional duties, implemented in April, was based on the sincere intentions of our trading partners. That suspension will now be extended until 1 August 2025." 'Where partners take significant steps to align with the United States on economic and national security matters, I may modify tariffs accordingly," he added. The tariff hikes form part of Trump's broader Reciprocal Tariff Policy targeting countries he accuses of maintaining unfair trade barriers against American goods. With India offering market access in sectors like dairy and medical devices, New Delhi hopes its cooperative stance will spare it from a similar fate. Also read: US trade deal down to the wire as tariff pause nears close
Mint
02-07-2025
- Politics
- Mint
Trump says Israel agreed to terms for 60-day Gaza ceasefire, hopes ‘Hamas takes the deal because…'
US President Donald Trump announced on Tuesday that Israel agreed to terms for 60-day Gaza ceasefire and urged Hamas to accept the proposal before the situation deteriorates further. This comes ahead of Trump prepares to meet Israeli Prime Minister Benjamin Netanyahu at the White House next Monday. Trump wrote on Social Truth, 'My Representatives had a long and productive meeting with the Israelis today on Gaza. Israel has agreed to the necessary conditions to finalise the 60 Day CEASEFIRE, during which time we will work with all parties to end the War.' He did not identify his representatives but US special envoy Steve Witkoff, Secretary of State Marco Rubio and Vice President JD Vance had been due to meet Ron Dermer, a senior adviser to Israeli Prime Minister Benjamin Netanyahu. He noted that the Qataris and Egyptians would deliver the final proposal. 'I hope, for the good of the Middle East, that Hamas takes this Deal, because it will not get better -- IT WILL ONLY GET WORSE,' he added further. Earlier in the day, Trump told reporters that he is hopeful that ceasefire-for-hostages deal between Israel and Hamas could be reached as early as next week. Hamas, meanwhile, indicated its readiness to release the remaining hostages in exchange for a deal to end the war. But, Israel says it can only end if Hamas is disarmed and dismantled. Hamas refuses to lay down its arms. On the other hand, over 150 international charities and humanitarian groups on Tuesday called for disbanding a controversial Israeli and US-backed system to distribute aid in Gaza because of chaos and deadly violence against Palestinians seeking food at its sites. The joint statement by groups including Oxfam, Save the Children and Amnesty International followed the killings of at least 10 Palestinians who were seeking desperately needed food, witnesses and health officials said. The war in Gaza was triggered when Hamas-led militants attacked Israel on October 7, 2023, killing 1,200 people and taking 251 hostages, according to Israeli tallies. The two sides have shown little sign of a readiness to budge from their entrenched positions. (With inputs from AP and Reuters)
