Is the U.S. Dollar Losing Its Global Clout?

Bloomberg's latest report shows that the U.S. dollar's value is decreasing rapidly, about 10 times faster than in the past 20 years.

Currently, the U.S. dollar accounts for 58% of global reserves, compared to 73% in 2001. This is believed to be due to developing nations’ experimentation with de-dollarization. Over the past two decades, the dollar has dropped by almost 15%, and concerns about an upcoming BRICS currency have led to further declines.

Since 2016, the dollar has lost approximately 11% of its market share due to developing nations replacing it for international trade. This trend has gained momentum, and it is causing the dollar to face the risk of global collapse.

China and Russia’s exceptional actions have challenged the dollar’s hegemony, leading other nations to side with them.

This has alarmed the U.S., as some European countries have started buying laundered oil from Russia via Saudi Arabia, and France has settled an LNG gas trade with China in Chinese Yuan. As a result, developing nations and European countries are seeking alternatives to the dollar.

Reports show that gold instead of the U.S. dollar may back the new BRICS currency. The World Gold Council has reported that BRICS nations, including China, Russia, and India, have bought tonnes of gold instead of the dollar. During Q1, 2023, these nations collectively purchased around 135.9 tonnes of gold.

If the BRICS currency becomes internationalized, the dollar may lose its status as a global reserve currency, causing economic turmoil in the U.S. As the dollar has already lost its luster, any additional pressure could result in losing its global influence.

The fate of the U.S. dollar’s prospects may be decided at the next BRICS meeting in South Africa in August 2023.

Author

Alexander Stefanov

Reporter at CoinsPress

Alex is an experienced finance journalist and a cryptocurrency and blockchain enthusiast. With over five years of experience covering the industry, he deeply understands the complex and constantly evolving world of digital assets. His insightful and thought-provoking articles provide readers with a clear picture of the latest developments and trends in the market. His passionate approach allows him to break down complex ideas into accessible and insightful content. Follow up on his content to be up to date with the most important trends and topics - stay ahead of the curve with CoinsPress.