According to an international Canadian academician, the stance of the US dollar’s dominance over the world market is alarmingly declining. Mentioning the rising trend for nations worldwide to swap the US dollar for their local currency in international transactions is a major force behind the dollar declination.
A professor at the University of British Columbia’s Sauder School of Business, James Branderon Thursday said that “The main reserve currency is the US dollar. In fact, the majority of the world’s foreign exchange reserves are held in US dollars. The US dollar has, however, been playing a more minor role. It’s still significant, but it’s been shrinking”.
“Other currencies are becoming more significant in international trade and as reserve currencies. The shift to using other currencies has been accelerated by current geopolitical tensions. Particularly Russia, China, and some other nations,” he added.
According to analysts, the desire to replace the US dollar with local currencies is a result of nations’ desire to lessen their reliance on Washington and stop it from further militarizing its hold on the world’s reserve currency.
As examples of how to conduct one’s economic affairs and significant transactions independently of the dollar, observers point to Iran, Venezuela, Russia, and China.
Also according to Brander, “more local currencies are being used for international transactions.”
So, a transaction between India and Russia is taking place, and it will either be handled in Indian or Russian currency. Instead of US dollars, we’re seeing more of that. I don’t see a problem with that,” he said.
Another reason why some nations are attempting to move away from using the dollar in international trade is because of the US’s extensive punitive actions against various nations.
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Moreover, the US Treasury Secretary herself issued a warning a few months earlier, stating that sanctions placed on nations like Iran and Russia were endangering the dollar’s hegemony over the world economy.
Janet Yellen said on CNN on April 16, “There is a risk when we use financial sanctions that are linked to the role of the dollar that it could over time undermine the hegemony of the dollar.”
She also continued by stating that countries in the Asian continent such as China, Russia, and Iran will undoubtedly want to look for an alternative, to eliminate the aggression of the dollar and to stand above US economic sanctions.