BRICS And Stones: Should An Emerging Alliance Worry The US?
Also, one long-running speculation has been that the BRICS nations ultimately want to form their own currency as an alternative to the U.S. dollar and the euro. This could reduce demand for the dollar as a reserve currency, which could lower the dollar's value relative to other currencies. A strong currency is a double-edged sword -- it makes imports cheaper but makes a nation less competitive on an export basis. Also, a weaker dollar would somewhat tie the Federal Reserve's hands on policy decisions, such as the current low-interest-rate approach.
It's possible that with stronger currency competition, the U.S. would have to offer higher interest rates to support the dollar. Depositors in savings accounts, CDs and money market accounts might love that outcome, but if it came about too suddenly it could be very disruptive to the economy.
Fortunately, multi-national financial cooperation is too complicated to come about quickly. For now, the BRICS summit is primarily a reminder that the future may be very different from today's world.
Select the service that is right for you!COMPARE ALL SERVICES
- $2.5+ million portfolio
- Large-cap and dividend focus
- Intraday trade alerts from Cramer
- Weekly roundups
Access the tool that DOMINATES the Russell 2000 and the S&P 500.
- Buy, hold, or sell recommendations for over 4,300 stocks
- Unlimited research reports on your favorite stocks
- A custom stock screener
- Upgrade/downgrade alerts
- Diversified model portfolio of dividend stocks
- Alerts when market news affect the portfolio
- Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
- Real Money + Doug Kass Plus 15 more Wall Street Pros
- Intraday commentary & news
- Ultra-actionable trading ideas
- 100+ monthly options trading ideas
- Actionable options commentary & news
- Real-time trading community
- Options TV