Lula Backs BRICS Currency to Replace Dollar in Foreign Trade

Earlier this month, Brazil’s Luiz Inacio Lula da Silva called on BRICS nations to come up with an alternative to replace the dollar in foreign trade, supporting China’s crusade against US global dominance just as he prepares to meet with President Xi Jinping in Beijing.

Brazilian President Luiz Inacio Lula da Silva said on Wednesday he supported creating a currency for trading between BRICS countries, a group that includes his nation as well as Russia, India, China and South Africa.

Speaking during a trip to Spain, Lula also said his government would not privatize any public company and once again called for an expansion of the U.N. Security Council’s permanent members.

Earlier this month, the Brazilian government gave up dollar as an intermediary and announced a deal to trade in local currency with China. After few days, President Luiz Inacio Lula da Silva, who visited China, had called for the BRICS nations to give up US dollar and come up with their own alternative currency to settle cross-border trade.

 He also called on developing countries to work towards replacing the US dollar with their own currencies in international trade.

 The dollar, which has been ruling as the global reserve currency, is gradually losing its dominance, especially after the onset of the Russia-Ukraine war last year. The US currency saw a massive decline of 8 per cent in 2022 in one year, “equivalent to 10 times the average annual pace of erosion in the USD’s market share in the prior years.”

A report by Eurizon SLJ Asset Management said that the US dollar “suffered a stunning collapse in 2022 in its market share as a reserve currency, presumably due to its muscular use of sanctions” after the Russia-Ukraine conflict.