At the recent BRICS Summit, bloc leaders reaffirmed their desire to reduce dependence on the U.S. dollar by expanding trade in local currencies.
The push is driven by geopolitical tensions, economic sanctions, U.S. tariff policy, and the frequent devaluation of member nations’ own currencies, according to experts.
Despite the bold language, analysts say the BRICS nations face enormous structural and political barriers that make any serious break from the dollar unlikely in the near term.
Data from the Bank of International Settlements shows the U.S. dollar made up 89% of the forex market as of April, up one percentage point from the previous year.
South African President Cyril Ramaphosa told the summit that BRICS should “press ahead with greater use of local currencies, stronger cross-border payment systems and deeper financial interconnectivity.”
Iranian President Masoud Pezeshkian argued the current financial system is “vulnerable to political shocks due to its concentration on a limited number of currencies,” signalling his country’s desire for alternatives.
Russia and Iran, both subject to heavy U.S. sanctions, have been among the loudest voices urging the bloc to build independent payment, settlement, and depository infrastructure.
Collectively, the 10 BRICS member countries accounted for 27% of world output, 24% of merchandise exports, and 22% of foreign direct investment inflows in 2024, according to a United Nations Trade and Development report.
Yet intra-BRICS trade represented only about 5% of world trade as of 2024, underlining the vast gap between the bloc’s ambitions and its current economic reality.
The BRICS 2026 declaration contained no mention of a common currency or firm details on trade settlements using local currencies, instead tasking a Payment Task Force with finding “practical solutions for cross-border payments.”
Jayant Krishna, senior fellow at the Center for Strategic and International Studies, told CNBC that BRICS lacks the unified institutional, financial, and macroeconomic infrastructure needed to substitute the “inherent liquidity and trust” of the dollar globally.
Reema Bhattacharya, head of Asia research at Verisk Maplecroft, noted that “Russia and China now settle close to ninety percent of their trade in rubles and yuan,” but attributed this shift to U.S. sanctions after 2022 rather than any coordinated BRICS policy.
She added that most BRICS currencies lack deep liquid markets outside their home economies, which keeps dollar invoicing the path of least resistance for global commodity trade.
Bhattacharya identified the “India-China rivalry” as “the single biggest brake on cohesion across the bloc,” with both nations competing fiercely in manufacturing, technology, and regional influence.
China-India trade reached a record $151.1 billion in the year ending March 2026, but India’s deficit with Beijing also hit a record $112.16 billion, up from $99.21 billion previously.
By contrast, India’s goods and services trade with the U.S. reached around $239 billion in 2025, giving New Delhi little incentive to abandon a dollar-denominated trading system.
Krishna Bhimavarapu, APAC Economist at State Street Investment Management, told CNBC that “BRICS members also have vastly different priorities,” with Russia and Iran focused on sanctions evasion, China seeking renminbi internationalisation, and India promoting the rupee.
U.S. President Donald Trump has previously threatened the bloc with 100% tariffs should any member attempt to create or back a currency designed to replace the dollar in global trade.
Bhimavarapu concluded that “ultimately, no BRICS-led alternative currently matches the liquidity and market depth, credibility and global acceptance of the Dollar,” summing up the central challenge facing the bloc.
Until deep financial integration, mutual trust, and coordinated institutions are established among member states, de-dollarization is likely to remain a talking point rather than a transformative global shift.