Morgan Stanley Predicts Dollar Decline as BRICS Gains Momentum

Wall Street’s crystal ball is flashing red for the USD—and gold watches aren’t the only thing BRICS nations are stockpiling.

The dollar’s dominance faces its toughest test yet as emerging markets forge new trade alliances. Forget ’too big to fail’—this is ’too arrogant to adapt’ territory.

One hedge fund manager yawns: ’Another day, another currency war prediction.’ But when Morgan Stanley talks, markets at least pretend to listen.

As BRICS looks to uproot the US dollar, leading global investment bank Morgan Stanley has predicted that the US dollar could decline by another 9% in the indices. The forecast estimates that the greenback’s DXY index could fall to the COVID-19 level low. The global bank wrote that the greenback could fall to the 91 level next losing considerable value. That’s a five-year low and is a steep decline despite the market recovering from the lockdowns three years ago. They wrote that the 10-year Treasury yields will also reach 4% by the end.

Morgan Stanley strategists wrote in the latest note that the outlook for the US dollar is questionable as de-dollarization soars among BRICS nations. Currency traders are considering local currencies for the first time as the greenback is stagnating in the charts. On Monday’s trading session alone, the USD is down 0.51 points and remains in the red since the opening bell. Traders are also cutting ties with US bonds and Treasuries and investing in Asian-based financial assets.

BRICS: Morgan Stanley Predicts a Decline in US Dollar’s Value

The US dollar is already down close to 9% year-to-date and had fallen to 12% at one point in April. The lowest it fell was 98 days after Trump’s Liberation Day when he unleashed a series of tariffs. Morgan Stanley had then warned that BRICS could leverage the development and make other countries cut ties with the US dollar.

Not just BRICS currencies, even the euro is now looking to compete with the US dollar on the global stage. The Chinese yuan, Japanese yen, and Indian rupee are also in the race to dim the supremacy of the greenback.Morgan Stanley strategists wrote.

The Euro & Other Local Currencies Surge in Value

As of June, the biggest winners against the US dollar are the Swiss franc, euro, and BRICS member India’s rupee. Morgan Stanley strategists wrote that the rival currencies could outperform the greenback in the current market situation. Tariffs and trade wars have rubbed emerging economies in the wrong way and everyone is looking to safeguard their economies.

The euro could reach 1.25 level next year from around 1.13 now as the US dollar slides, wrote Morgan Stanley. The US dollar’s dip is a gain for BRICS as the alliance wants power to be tilted from the West to the East. Both analysts and traders now remain skeptical about the USD’s prospects as the currency is delivering more losses than profits.

The BRICS bloc is now well-positioned to take on the US dollar as local currencies are now in demand. The WHITE House must take immediate steps to stop the USD’s erosion or fall prey to the de-dollarization agenda. This is no longer a laughing matter as the next decade could be different from the one we know today. Morgan Stanley’s prediction on the US dollar is alarming and the Feds must address its global declining power.