Dollar sentiment hits 14 year low as BRICS advance payment network

15:37

By: Dakir Madiha

Dollar sentiment hits 14 year low as BRICS advance payment network

Investor sentiment toward the US dollar has fallen to its most bearish level in more than 14 years as the BRICS bloc steps up efforts to develop a cross border payment system aimed at reducing reliance on dollar dominated financial channels.

The initiative builds on Brazil’s instant payment platform Pix and a decentralized messaging system created by researchers in Russia. Together, the framework represents one of the most tangible moves by BRICS nations to establish alternatives to mechanisms such as SWIFT, which has long underpinned global dollar transactions.

Reuters reported in January that the Reserve Bank of India has proposed linking central bank digital currencies among BRICS members as a priority for the 2026 summit to be hosted by New Delhi. If adopted, the plan would mark the first formal attempt to connect digital currencies issued by Brazil, Russia, India, China and South Africa, as well as newer members including Egypt and the United Arab Emirates.

The proposal follows a declaration issued at the 2025 BRICS summit in Rio de Janeiro calling for greater interoperability among national payment systems. Under such a framework, cross border transactions could be settled directly in local currencies without passing through correspondent banks or dollar clearing hubs.

At the center of the proposed system is the Decentralized Cross Border Messaging System, developed by scientists at Saint Petersburg State University. The platform operates without a central owner or hub, with participating institutions running their own nodes. Supporters argue that this decentralized structure would make the network more resilient to external interference or sanctions.

Developers say the system can process up to 20,000 messages per second while requiring limited hardware resources. Brazilian President Luiz Inácio Lula da Silva has promoted Pix as a model for the bloc, noting that the platform handled roughly 7 trillion reais in transactions in early 2025 and now accounts for nearly half of Brazil’s non cash payments.

The push to build new payment infrastructure coincides with a sharp shift in currency markets. A February survey found that investor exposure to the US dollar had dropped to its most negative level since at least January 2012, when tracking began. Net short positions in the dollar reached their highest level in more than 14 years, falling below previous lows recorded in April 2025.

Survey respondents cited concerns over a potential weakening of the US labor market as a key driver of further dollar downside. Worries about the Federal Reserve’s independence have eased following President Donald Trump’s appointment of Kevin Warsh as Fed chair, according to the findings.

The parallel between BRICS payment initiatives and the dollar’s market vulnerability highlights a sustained effort by emerging economies to diversify financial channels. Whether the proposed infrastructure can achieve its objectives will depend on resolving technical standardization issues and aligning governance frameworks among countries with differing economic priorities.