In the first half of 2024, the global financial landscape witnessed an increase in de-dollarization momentum. The move is driven by various geopolitical, economic and strategic factors as countries seek to diversify their currency holdings and reduce vulnerability to US monetary policy and financial and economic sanctions, note DBS macro analysts Philip Wee and Ma Tieying.
The momentum of de-dollarization increases
“Many countries are not seeking to decouple from the US Dollar (USD) but rather to reduce dependence on the USD and other Western reserve currencies, such as the de-risking policy pursued by the US and EU with China. They are responding to rising geopolitical tensions, particularly between the US and Europe against Russia and China.”
“An enlarged BRICS can develop alternative financial institutions and systems, reducing reliance on traditional institutions such as the IMF and World Bank. BRICS countries could also increase their collective influence in international forums such as the United Nations and the G20, creating a counterweight to Western alliances such as NATO and the EU.”
“According to the BIS, the USD accounts for almost 90% of global foreign exchange transactions in trade and investment, far ahead of other significant currencies such as the Euro (EUR) and the Off-shore Yuan (CNY). However, the process of de-dollarization has long-term implications for global markets, trade dynamics and the international monetary system.”
Source: Fx Street
I am Joshua Winder, a senior-level journalist and editor at World Stock Market. I specialize in covering news related to the stock market and economic trends. With more than 8 years of experience in this field, I have become an expert in financial reporting.
