BRICS is an acronym representing an association of five major emerging economies: Brazil, Russia, India, China, and South Africa.

Originally formed as BRIC (excluding South Africa) in 2006, the group expanded in 2010 with the inclusion of South Africa, becoming BRICS.

The bloc aims to enhance economic cooperation, promote multilateralism, and challenge Western-dominated financial systems.

BRICS has expanded further to include Egypt, Ethiopia, Iran, and the United Arab Emirates, with Indonesia joining as the 10th member, sometimes referred to as BRICS+.

Objectives and Significance

BRICS focuses on:

  • Economic collaboration – Increasing trade and investment among member states.
  • De-dollarization – Reducing reliance on the U.S. dollar in global trade and finance.
  • Alternative financial systems – Developing payment mechanisms outside Western-controlled platforms like SWIFT.
  • Geopolitical influence – Strengthening the voice of emerging economies in global governance.

Economic Impact

Collectively, BRICS nations account for:

  • ~37% of global GDP (PPP).
  • ~44% of the world’s population.
  • ~42% of global foreign exchange reserves.

The bloc has also explored the creation of a common currency, potentially backed by gold or a basket of member currencies, to compete with the U.S. dollar.

Why Currency Traders Should Monitor BRICS

For forex traders, BRICS developments are crucial due to:

  1. Exchange Rate Volatility – A potential BRICS currency could stabilize intra-bloc trade but introduce new volatility against the dollar and euro.
  2. Shift in Currency Pairs – Trading platforms may introduce new BRICS-linked pairs, requiring strategy adjustments.
  3. De-dollarization Trends – Increased use of local currencies (e.g., yuan, rupee) in trade could weaken dollar dominance, affecting forex liquidity.
  4. Geopolitical Risks – U.S. tariffs or sanctions may trigger currency fluctuations in BRICS nations.
  5. Commodity Markets – BRICS nations dominate oil and commodity trades; currency shifts could impact pricing (e.g., yuan-priced oil).

Challenges

  • Economic disparities among members complicate monetary union efforts.
  • Lack of financial infrastructure for seamless local-currency trade.
  • Dependence on China’s yuan, raising concerns about Beijing’s dominance.

Future Outlook

BRICS’ push for dedollarization and alternative payment systems (e.g., blockchain-based solutions) could reshape global forex markets, though full dollar displacement remains unlikely in the near term.