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Haider Jamal

Sep 03, 2023

BRICS Countries Drastically Reduce US Treasuries Holdings

China recently saw its US treasury holdings drop to $835.4 billion in June 2023, marking a substantial decrease of approximately $103.4 billion within just a year. Despite this reduction, China remains one of the largest creditors to the United States, with Japan holding the top position at $1.105 trillion.

In other news, the BRICS nations are also reportedly considering Bitcoin as a possible alternative in order to stop relying on the US Dollar for international exports and trading purposes.

 

A New Era

Meanwhile, Saudi Arabia, a new member of BRICS, decreased its US debt holdings by $11.1 billion during the same period, going to $108.1 billion. These declines in US bond holdings by these BRICS nations reflect their growing opposition to the dominance of the US Dollar on the global stage.

Ziad Daoud, the Chief Emerging Markets Economist for Bloomberg, suggests that Saudi Arabia deciding to shift towards riskier assets may impact the stance which the Federal Reserve takes regarding interest rates, both domestically and globally. Higher risks for Saudi Arabia could lead to potential losses, and globally, the reallocation of Saudi wealth might result in increased US interest rates.

 

Challenging The Dominance Of The US

It is worth noting that besides China and Saudi Arabia, the latter of which is also quickly becoming a global crypto hub, other nations have been increasing their holdings. India, for instance, acquired $26.6 billion worth of US debt securities between June 2022 and June 2023. Additionally, the United Arab Emirates (UAE) and Brazil added $25.1 billion and $1.3 billion, respectively, to their US treasury holdings over the same 12-month period.

BRICS was originally known as BRIC when it was founded in 2006, with Brazil, Russia, India, and China as its founding members. South Africa joined the group in 2010, making it BRICS. The member countries came together with the common goal of enhancing cooperation and dialogue among emerging economies, particularly those with significant global influence.

In summary, BRICS exists to promote cooperation and collaboration among major emerging economies, leveraging their collective strength to influence global economic and political matters. It serves as a platform for dialogue and cooperation in an increasingly multipolar world, challenging the traditional dominance of Western powers, particularly the United States.

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