‘Why can’t we trade in our own currencies?’: Brazil’s Lula repeats de-dollarisation call of BRICS nations

The US dollar’s role as world’s primary reserve currency for global trade was challenged at a finance summit in Paris by South African President Cyril Ramaphosa and his Brazilian counterpart Luiz Inácio Lula da Silva after the US Treasury Secretary defended the oversized role of US dollar in global markets.

At Paris Climate Finance summit, South African President Cyril Ramaphosa appeared to support Brazilian President Luiz Inácio Lula da Silva’s call for emerging markets in the Global South to reconsider their reliance on the dollar.

Lula, who was on a panel with Ramaphosa, called for trading in domestic currencies and exploring alternative options.

‘Issue of currency’ to be discussed in BRICS summit

South African President Ramaphosa said that the “issue of currency” would be discussed at the upcoming meeting of BRICS countries later this year, which South Africa is scheduled to host in August.

The BRICS group comprises Brazil, Russia, India, China, and South Africa.

Yellen argued that finding viable replacements for a currency that has dominated trade for decades would pose challenges for countries.

“There is a very good reason why the dollar is used widely in trade and that’s because we have deep, liquid, open capital markets, rule of law and long and deep financial instruments,” she was quoted as saying by Financial Times.

Yellen’s comments came at a time when China is pushing for increased international adoption of Yuan.

Russia has been using the Chinese currency as one of its main currencies for international reserves and overseas trade since the beginning of war in Ukraine.

Concerns have been raised that Washington might increasingly exploit the global dominance of the dollar to further its foreign policy objectives, as exemplified by the freezing of $300 billion worth of Russian central bank assets held in dollars and euros by Ukraine’s western allies.

Also watch | Is BRICS raging against the US Dollar an exercise in futility?

Although some central banks have responded to the sanctions on Russia by purchasing gold, they still retain nearly 60 percent of their reserves in US currency, according to IMF data cited by Financial Times.

During the closing ceremony of the Paris summit, co-hosted by French President Emmanuel Macron and Prime Minister of Barbados Mia Mottley, Lula reiterated his concerns about the negative impact of the dollar’s dominance on low- and middle-income countries.

He questioned why countries like Brazil couldn’t engage in trade using their own currencies when conducting business with Argentina, China, or other nations.

“Why can’t we trade in our own currencies?” he asked.