According to the dollar blast? Goldman Sachs warns of Brics AiOFM.Net

Global economic order varied under the effect of the United States of the Protectionist decisions. While Briccs is aiming to reduce their dollar addiction, the main search can be an indentation. Back to the power of American customs tariffs could encourage Greenback, which would threaten to weaken emerging economies and slow down their efforts for dedolarization. This increase in the dollar growth, far from trivial, could mark a turning point for a global monetary balance.

US protectionist measures and dollar outbreak

The United States, under the leadership of Donald Trump, have revived Aggressive Customs Tariff Policywhich influenced a wide range of imported products. This decision is part of a strategy that aims to rebalance the US trade balance and strengthen the dollar status in international markets. According to Goldman Sachs, this protection dynamics should have a mechanical effect on the value of the dollar, which would make US currency more attractive investors. So “entities that take long dollar positions will see their profit increasing because prices reinforce its attractiveness”, explain Bank analysts.

The consequences of this policy go beyond the United States. Indeed, Mexico and Canada have already been subjected to the influence of these prices increases, which increases trade tensions between economic blocks. But it is mostly Brics that could be the main victims. For several years, these emerging economies work on reducing their dollar dependence in international trade. The depreciation of their currencies in a meeting in full rise would completely die out these efforts, which their imports would more expensive and weaken their economic systems.

Brics in difficulties against amplified dollar

One of the Brics strategic pillars lies in the diversification of monetary transactions and the establishment of an economic system that is less dependent on the dollar. However, this increase in the gretation could reverse this trend. Excessively brutal appreciation of dollars would destroy several years of work on dedolarization. Inflation imported to the countries of the Bić Bloc, in combination with increased long-denominated in dollars, could significantly slow their economic ambitions.

In addition, this situation provides information on the vulnerability of the block before international monetary fluctuations. If China and Russia have tried to impose Yuan and laundry as an alternative dollar, recent tensions in financial markets reveal that the adoption of these currencies remain limited. Therefore, it is too strong an increase in greenery, so it will probably improve the dominance of the American financial system, which can reduce the Brics maneuvering room in international transactions.

As the dollar increase in a short time makes inevitable, the Brics will have to speed up their efforts to oppose this new agreement. Review of their monetary strategy can be considered, together with improved cooperation with other nations in emerging, limiting the impact of this instability. It remains to be seen whether this growth will be sufficient to lead to boarding the system dominated by a dollar or if, on the contrary, this new gives to strength in world trade.

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