In a recent analysis, BNY Mellon has concluded that the U.S. dollar will likely retain its status as the world’s primary reserve currency for the foreseeable future. This conclusion comes even as the BRICS group—Brazil, Russia, India, China, and South Africa—expands to include new members like Iran, Argentina, Saudi Arabia, the United Arab Emirates (UAE), Ethiopia, and Egypt.
The BRICS summit, held last week in Johannesburg, highlighted the group’s goal to offer alternatives to the dollar. The addition of these new nations is poised to create a powerful bloc in global energy markets, particularly oil. With this expansion, the BRICS group will control 75% of the world’s manganese, 50% of global graphite, 28% of nickel, and 10% of copper. The inclusion of Saudi Arabia, the UAE, and Iran means that BRICS will now account for 42% of global oil supply.
Despite these significant resources, BNY Mellon suggests that such developments will not diminish the dollar’s dominance. Bob Savage, head of markets, strategy, and insights at BNY Mellon, indicated that the dollar’s position is likely to remain secure due to the ongoing reliance on high-end technology and computer chips, rather than commodities like gold.
Savage remarked, “The inclusion of major oil exporters like the UAE and Saudi Arabia may enhance the economic strength of the BRICS nations, but it does not resolve long-term challenges related to the energy transition from carbon to sustainable sources. The future of global currency usage will likely hinge more on technological advancements rather than shifts in commodity-based currencies.”
The report highlights that while BRICS is strengthening its economic position globally, the U.S. dollar is expected to continue its prominent role in international finance due to its integral role in technology and economic stability.
