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BRICS move away from US Treasury bonds to weaken the dollar

Tue 12 Sep 2023 ▪ 4 min of reading ▪ by Luc Jose A.
Crypto regulation

China is one of the United States’ fiercest competitors for global hegemony. At least in economic terms. To achieve this, the country seems to be pursuing a strategy of limiting or even reducing its investments in the United States. Saudi Arabia, which has just joined the BRICS, also seems to be doing the same, further confirming its plans to leave the dollar behind.

The BRICS inscription and a burning dollar bill

In brief:

  • China and Saudi Arabia are reducing their investments in US Treasuries by $103.4 billion and $11.1 billion respectively.
  • This Sino-Saudi financial strategy aims to diversify investments and neutralize the hegemony of the US currency.
  • According to expert Ziad Daoud, these moves could impact the Federal Reserve and raise US interest rates.

Ces membres des BRICS qui réduisent leurs investissements aux Etats-Unis

Some may have thought that the BRICS were just a bunch of fluff. In other words, the group was a giant with feet of clay. That’s one view. But the fact remains that certain members of the organization are gradually moving their pawns.

Admittedly, doubts still persist as to the BRICS’ inevitable exit from the dollar. But it is becoming increasingly clear that there is no shortage of strategies to achieve this. Recent news about two BRICS members, China and Saudi Arabia, points in this direction.

According to the latest information, these two countries are making substantial adjustments to their investments in US Treasuries. These are in fact bonds issued by the United States, to mobilize financing for their operations and projects.

Financial experts unanimously agree that U.S. Treasuries are safe investments. In any case, among the most credible in the world. A status they hold thanks to the U.S. government’s acknowledged creditworthiness.

This being the case, it is intriguing to see China and Saudi Arabia reduce their investments in US Treasuries. By $103.4 billion and $11.1 billion respectively, in the space of a year!

This is all the more intriguing given that investments in US Treasuries are useful to two BRICS stakeholders. On the face of it, these countries have no interest in reducing them… unless they see this as an obvious way of further weakening the power of the dollar.

China and Saudi Arabia significantly reduce their investments in US Treasuries

An investment policy that affects the United States?

Objectively speaking, this Sino-Saudi financial strategy reflects a clear desire to diversify investments. Instead of investing in US Treasury bonds, Saudi Arabia, for example, is turning to riskier asset classes.

This change in economic relations with the United States is not without consequences. According to emerging markets expert Ziad Daoud, this policy could have repercussions on the position of the Federal Reserve. This prospect is in line with the BRICS’ determination to neutralize US monetary hegemony at all costs.

The economist explains that, while this strategy may entail higher risks at national level, it could also have an impact on financial markets. This would have an impact on global financial markets and raise US interest rates.

As we know, this rise in interest rates is rarely a good thing for the crypto market. Under such circumstances, we potentially see a massive outflow of crypto capital. This can have an impact on the price of these assets.

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Luc Jose A. avatar
Luc Jose A.

Diplômé de Sciences Po Toulouse et titulaire d'une certification consultant blockchain délivrée par Alyra, j'ai rejoint l'aventure Cointribune en 2019. Convaincu du potentiel de la blockchain pour transformer de nombreux secteurs de l'économie, j'ai pris l'engagement de sensibiliser et d'informer le grand public sur cet écosystème en constante évolution. Mon objectif est de permettre à chacun de mieux comprendre la blockchain et de saisir les opportunités qu'elle offre. Je m'efforce chaque jour de fournir une analyse objective de l'actualité, de décrypter les tendances du marché, de relayer les dernières innovations technologiques et de mettre en perspective les enjeux économiques et sociétaux de cette révolution en marche.


The views, thoughts, and opinions expressed in this article belong solely to the author, and should not be taken as investment advice. Do your own research before taking any investment decisions.