HSBC has issued a confident forecast regarding the future of the US dollar amid the BRICS nations’ efforts to reduce its global dominance. Despite these dedollarization initiatives, HSBC analysts assert that the dollar will continue to dominate as the world’s reserve currency for decades.
HSBC’s Forecast on the US Dollar
James Steel, Chief Commodities Analyst at HSBC, emphasized in a recent Bloomberg interview that the US dollar will retain its status as the world’s reserve currency for the next 20 years. “We do not believe there will be a loss of sovereignty for the US dollar as the world’s reserve currency for the next 10, 20 years, for reasons that would require a whole program,” Steel stated. This comes as the BRICS—Brazil, Russia, India, China, and South Africa—intensify their efforts to diversify away from the dollar.
BRICS’ Dedollarization Efforts
Since 2022, the BRICS nations have been diversifying their reserves, notably by amassing significant quantities of gold. This strategy emerged in response to economic sanctions imposed by the United States on Russia following the invasion of Ukraine. The BRICS aim to shield themselves from the volatility of the US dollar and enhance their economic independence.
However, HSBC predicts that these efforts may fall short of dethroning the greenback. According to Steel, the local currencies of BRICS countries currently lack the stability and global confidence that the US dollar commands. “Dedollarization by the BRICS may not achieve its objectives, as the dollar remains a safe haven in times of economic uncertainty,” he explained.
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