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| NDB Bank considers increasing capital mobilization in local currencies. (Source: GFMAG) |
Increasing the use of the currency among NDB members will be on the agenda at the bloc’s summit this month, to prevent the risk of impact from exchange rate fluctuations rather than de-dollarization, according to Enoch Godongwana.
The greenback has appreciated against emerging market currencies since the conflict between Russia and Ukraine broke out. The US Federal Reserve began raising interest rates to control inflation in early 2022, making interest payments on dollar debt of BRICS countries more expensive.
South Africa's Finance Minister revealed that most of the NDB's member countries are encouraging the bank to issue loans in member countries' currencies.
The NDB was established in 2015 and is the bloc's flagship financial project. The number of NDB members has increased from five to eight and the bank only provides loans to member countries.
NDB chief financial officer Leslie Maasdorp said the bank's goal is to increase the share of lending in member countries' currencies from 22% to 30% by 2026, but there are limitations to de-dollarization.
The bank's ambitions to serve emerging economies and its efforts to de-dollarize have been hampered by the economic situation and the conflict between Russia and Ukraine.
Increasing funding in local currencies and from new members could help the NDB in difficult times, reducing its reliance on US capital markets as sanctions against Russia drive up borrowing costs, analysts say.
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