The de-dollarization initiative kick-started by leading developing countries is threatening the reserve currency status of the US dollar. Emerging economies are looking to use their local currencies for cross-border transactions to strengthen their respective GDP. The move also allows local currencies to compete in the forex markets and not be chained under the US dollar.
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The quest to topple the US dollar from the global reserve currency status is paying off as developing countries forge trade deals that equip them to settle payments in local currencies through the de-dollarization initiative. Several countries including India, China, the United Arab Emirates, and Brazil, among others, have paid local currencies for trade settlements.
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De-Dollarization: No Alternative Currency To the US Dollar
Ashishkumar Chauhan, the Managing Director of the National Stock Exchange (NSE) spoke about the changing dynamics of the currency markets in a recent technology and capitalism panel. Chauhan discussed the future of de-dollarization and stressed that no currency is in a position to replace the US dollar. The greenback has no challenges as it controls almost every global sector including finance and technology.
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He explained that during World War II, the US dollar was in the right place to overtake the British pound. The greenback was positioned strongly for the takeover with the right economic policies to gain control of the global finances. No other currency is positioned in a similar situation to take on the US dollar now making the de-dollarization agenda a failure.
“After World War II, the US meticulously positioned itself to replace the British pound as the global reserve currency. Today, no other country is ready to take on that role,” he argued indicating that the US dollar will face no damage through de-dollarization. Despite economic might from China, Japan, and India, their currencies fold under pressure when the market faces rough waters.
