Central banks in most developing countries are now diversifying their allocations with gold and other local currencies. The US dollar is under scrutiny as it has $35 trillion in debt that could wreak havoc on their domestic economies in the event of a market crash or recession. The BRICS countries are leading the way in removing the peg to the US dollar and strengthening local currencies.

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Global reserves of US dollars are falling as central banks look for ways to end dependence on the currency. Read here how many sectors in the US will be affected if the BRICS countries abandon the dollar for trade.

BRICS: Global US dollar reserves fall to 59%

The US dollar’s share of global reserves has fallen to 59% in 2024, according to the Atlantic Council. The US dollar’s share of reserves was 72% in 2002 and has been steadily declining over the past two decades. In 22 years, the USD lost 13% in the markets as developing countries separated the currency from their reserves. Unsurprisingly, BRICS member China’s national currency, the yuan, rose 3% over the same period.

Also read: US dollar: Indian rupee ranks second worst in August

In addition, the value of the euro has also fallen, by 19 percent compared to 28 percent in 2008. The euro has experienced a decline of 9 percent in just 16 years. “The euro has now fallen from 28% in 2008 to 19%. The yuan has risen to 3%, tripling since 2016,” said Russian Foreign Ministry spokeswoman Maria Zakharova.

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BRICS promotes the use of local currencies for cross-border transactions, thereby increasing pressure on the US dollar. If the trend of de-dollarization continues, global reserves in USD could fall below 50% in the coming decades. This development could be a warning signal for the US economy, leading to financial disasters and stock market crashes.