BRICS, the Dollar, and Pakistan's Currency Dilemma

As the BRICS grouping expands and member states talk up trade in local currencies and alternatives to the dollar, a seductive idea circulates in capitals across the Global South: that a multipolar monetary order could loosen the grip of US-dollar dependence. For a chronically dollar-short, heavily indebted economy like Pakistan’s, the narrative is especially appealing. The reality is more constrained.

The genuine appeal. Pakistan’s vulnerabilities are denominated in dollars: its external debt, its energy import bill, its reserve adequacy. Anything that reduced the need to earn and hold scarce dollars — settling trade with China in yuan, with Russia or the Gulf in local currencies — would, in principle, ease the squeeze. Islamabad has experimented at the margins, and the logic is sound as far as it goes.

Why the math resists. The constraints are stubborn. The dollar still dominates global trade invoicing, commodity pricing, and capital markets; there is no liquid, trusted substitute at scale. The most available alternative, the yuan, comes with its own dependency — and tilting further toward Beijing’s currency deepens exactly the strategic alignment that the chip war and great-power competition make costly. Most of Pakistan’s debt is owed in dollars regardless of how it trades; you cannot wish a balance sheet into another currency.

The bloc question. BRICS offers Pakistan something subtler than monetary escape: optionality and political cover. Closer alignment with a non-Western bloc could expand financing options and diplomatic room. But Pakistan also depends on the IMF, Western markets, and Gulf capital — and India’s weight inside BRICS complicates any Pakistani embrace. Picking a monetary side is no easier than picking a technological one.

The takeaway. De-dollarisation is a real, slow, structural trend — but it is a marginal hedge, not an exit, and certainly not a substitute for fixing the fundamentals that make Pakistan dollar-dependent in the first place. The countries that reduce dollar vulnerability do so mainly by running sounder economies, not by switching currencies. For Pakistan, the BRICS conversation is worth having — and worth keeping in proportion.