The ASEAN Secretariat officially announced that the alliance is not abandoning the US dollar for trade. Secretary-General Kao Kim Hourn told AFP that ASEAN is not “giving up dollars” to mitigate risks emerging from Trump’s tariffs.

The statement comes after the alliance discussed various de-dollarization plans at the 2023 summit. The bloc pushed local currency settlements for cross-border transactions to avoid using the US dollar for payments.

However, ASEAN has now taken a U-turn and confirmed that it will use the US dollar for trade and transactions. While the bloc agreed that they prioritize local currencies, the USD will also be used for trade.

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ASEAN Will Not Ditch the US Dollar, Confirms Secretariat

Standard Chartered’s Global Head of Research and Chief Strategist Eric Robertsen said that ASEAN cannot challenge the US dollar. He explained that the greenback has solid global backing and local currencies are no match for its market supremacy.

“The US dollar continues to be a key currency in global trade, particularly for ASEAN countries,” said Robertsen.

He also added that import and export businesses in the ASEAN region predominantly use the US dollar for transactions. Local currencies play no prominent role due to their weakening value. The greenback commands a larger share of the market, and moving away is a herculean task.

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“ASEAN companies predominantly hold their export receivables in USD, underscoring its critical role. While there is some movement towards diversifying into the Chinese Yuan to balance trade receivables, this is a complementary strategy rather than a shift away from the USD,” said Robertsen.

Natixis’ Asia-Pacific Chief Economist, Alicia García-Herrero, also agreed that ASEAN will find it hard to move away from the US Dollar. “But of course, given what’s happening with Trump and the US economy, the lack of credibility is clear, and this process will eventually take place. But I wouldn’t think that this is happening already,” she said.