How much is the BRICS currency likely to be worth?

The 15th BRICS Summit takes place this week in Johannesburg from August 22-24 at the Sandton Convention Centre. The BRICS nations are interested in creating a new currency to compete with the US dollar.

The BRICS summit comes as countries across the world are confronting a changing geopolitical landscape that is challenging the traditional dominance of the West.

The potential currency, while still under review and development, would allow these developing nations to assert their economic independence while competing with the existing international financial system.

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The current system is dominated by the US dollar, which accounts for about 90 percent of all currency trading and nearly 100 percent of oil trading.

If the currency were to be created, its value would likely be based on a basket of the currencies of the five member countries. The exact composition of the basket would need to be agreed upon by the BRICS countries, but it would likely include the Brazilian real, Russian ruble, Indian rupee, Chinese yuan and South African rand.

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The current value* of the respective BRICS nations’ currencies is as follows:

South African rand (ZAR) = USD 0.053
Brazilian real (BRL) = USD 0.20
Indian rupee (INR) = USD 0.012
Chinese yuan (CNY) = USD 0.14
Russian ruble (RUB) = USD 0.011

The value of the BRICS currency would be determined by supply and demand, just like any other currency. The creation of a BRICS currency could have a number of implications for the global economy.

According to The Economist, if a BRICS currency were to be created, it would likely be worth less than the US dollar. The BRICS countries have large economies, but they are also subject to greater economic volatility than the US.

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This means that the value of a BRICS currency would be more likely to fluctuate, which would make it less attractive to investors.

WHAT ARE THE ADVANTAGES OF HAVING A BRICS CURRENCY?

A new currency is perceived to have several benefits for the BRICS countries, including more efficient cross-border transactions and increased financial inclusion.

By leveraging blockchain technology, digital currencies and smart contracts, the currency could revolutionize the global financial system. Thanks to seamless cross-border payments, it could also promote trade and economic integration among the BRICS nations and beyond.

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A new BRICS currency would also:

• Strengthen economic integration within the BRICS countries.
• Reduce the influence of the US on the global stage.
• Weaken the standing of the US dollar as a global reserve currency.
• Encourage other countries to form alliances to develop regional currencies.
• Mitigate risks associated with global volatility due to unilateral measures and the diminution of dollar dependence.

Discussions about creating a common currency for the BRICS countries are a sign of the growing economic and political power of these emerging economies.

*exchange rate as at 22 August 2023