The latest BRICS summit in Kazan, Russia has intensified discussions around de-dollarization, potentially impacting several major currency-focused exchange-traded funds and raising concerns among U.S. investors about the dollar’s long-term dominance in global trade.
What Happened: Russian President Vladimir Putin‘s push for an alternative international payments system at the expanded BRICS summit has put dollar-denominated assets under renewed scrutiny.
Notable ETFs that could face pressure include the Invesco DB US Dollar Index Bullish Fund UUP and the WisdomTree Bloomberg U.S. Dollar Bullish Fund USDU.
“The dollar is being used as a weapon. We really see that this is so. I think that this is a big mistake by those who do this,” Putin stated at the summit, highlighting that nearly 95% of Russia-China trade is now conducted in rubles and yuan, reported The Guardian.
Market analysts suggest that while immediate impacts may be limited, the long-term implications for dollar-based investments deserve attention. The Invesco DB USD Index Bearish ETF UDN has seen increased trading volume as investors hedge against potential currency risks.
However, currency experts emphasize the dollar’s entrenched position. According to Agathe Demarais, a sanctions specialist at the European Council of Foreign Relations, “More than 80% of global trade transactions are invoiced in U.S. dollars, which also accounts for nearly 60% of central banks reserves.”
Why It Matters: The summit’s outcomes suggest limited immediate progress on alternative payment systems, despite Russia’s efforts to bypass the SWIFT network. Brazil and India’s resistance to anti-Western positioning within BRICS indicates that wholesale changes to the global financial system face significant hurdles.
The expanded BRICS bloc, now including 12 new members such as Turkey, Indonesia, and Nigeria, represents a growing challenge to dollar hegemony. However, market fundamentals suggest any transition away from the dollar would be gradual rather than immediate.
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Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.
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