Most people don't know the reasoning behind BRICS and the refusal to use the $
It's pretty simple, the US $ is not stronger but the local currencies are getting weaker.
https://archive.ph/9gh3ETranslated from the Original Site
https://www.faz.net/pro/weltwirtschaft/finanzwelt/starker-dollar-stellt-schwellenlaender-vor-ein-dilemma-110228604.htmlThe world is watching the interest rate decisions of the central banks with anticipation, especially the American Federal Reserve (Fed). Despite the interest rate cut in December, the Fed has adopted a cautious tone in its forward strategy. Fed Chairman Jerome Powell is waiting to see how the new Trump administration behaves in terms of trade and financial policy, speculated Marcello Estevão, chief economist of the Institute of International Finance (IIF). He and his team examined the latest measures of the most important central banks in the industrialized and emerging countries and analyzed the effects of a strengthening US dollar.
It's not the interest rating of the US$ which makes the US Currency so popular. It's the falling currencies of the nations not living under Euro or Dollar domains.
Last year, central banks faced the challenge of balancing growth and inflation as the global economy was marked by uneven recoveries and geopolitical uncertainty. However, the Fed, the European Central Bank (ECB) and the Bank of Japan (BoJ) moved in different directions or at different paces. For Estevão, this is a sign that a fragmented global economy makes it difficult to "synchronize monetary policy strategies."
My vision of those directors being challenged is more like a meeting of fat cats. Just sipping their preferred liquor. What's yours?
Now 2 things emerging countries fear is 1.st) the $ climbing even higher as debts from the world bank, IMF or even governmental bonds are issued in ..... yeah the $.
Emerging markets have $8.3 trillion in debt
The strong dollar is causing problems for emerging markets. It shows the structural weaknesses associated with foreign debt and financial flows, writes Estevão in Global Macro Views: "The strengthening US dollar continues to put pressure on emerging markets, increasing the burden of US dollar-denominated debt and affecting capital flows, further complicating the monetary policy environment."
Now imagine the dollar drops to 50% vs the Euro. Nothing would change for a country without a meaningful reserve.
Their currency needs to rise in value to make a difference. Only country trying to do that is South Korea. Turkey wasn't too successful.
The 2nd fear is: Your president going against capital flight, your country's currency is failing.
Nowadays people with money go into Bitcoin for a reason. We are all grateful for that.
Emerging markets will need to devise innovative policy strategies in 2025 to prevent capital flight, inflation shocks and fiscal constraints that a persistently strong dollar would bring.
