Portfolio Optimization of BRICS Nations' Currencies (Brazil, Russia, India, China, South Africa) and Their Regional Allies

Abstract

This paper explores the novel paradigm of the BRICS Plus as a gateway connecting continents—Africa and Asia—facilitating a diversified integration into the global economy. At the ninth BRICS summit in Xiamen, Fujian province, China, in September 2017, the proposal to create an open and diversified network with partners, termed BRICS Plus, was put forward. This initiative seeks to extend cooperative relationships beyond the current bloc, fostering an exchange of progressive practices and economic integration to defend the interests of developing countries. In accordance with the BRICS Plus model, dialogue and collaboration among BRICS members and non-member countries are to proceed on an equal footing, potentially reshaping current financial interactions by broadening the use of national currencies in international investments and trade. This expanded cooperation aims to reduce reliance on the US dollar and strengthen the coordination of developing nations in international affairs. Additionally, as more countries join this project, a consolidated voting power in institutions like the IMF is anticipated, potentially amplifying the influence of developing nations on key global financial decisions. The BRICS Plus model serves not only as a conduit for connecting disparate economies but also as a platform for addressing the needs of a wider array of developing countries, thereby enhancing their representation in the global arena.