The world is slowly moving toward re-dollarization and toward accepting the US dollar as the most important currency. The momentum is largely seen from exporters, private enterprises, and commercial institutions, and businesses that are actively retaining the US dollar while converting only a small portion of their revenues into local currencies.

For instance, exporters from the East Asian country Taiwan are converting just 2% of their business revenues into local currencies, while retaining the remaining 98% in the US dollar, according to a report from Fortune. This is occurring in real time, where re-dollarization is becoming the norm for exporters, as it keeps their businesses afloat.

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Why is Re-Dollarization Gaining Momentum?

Re-dollarization is gaining momentum because private businesses want to avoid holding volatile local currencies. After the US-Iran war broke out, exporters want a secure store of value for global supply chains and cross-border transactions. The safe store of value is only seen in the US dollar, as the currency is highly liquid even during times of turmoil. The massive 98% retention of the US dollar highlights that the USD is an important currency to remain in business.

Local currencies often lack the deep bond markets, international clearing infrastructure, and stability needed to manage large-scale corporate balance sheets. Exporters operating on thin margins cannot afford to lose out on the US dollar or risk their revenues. Switching away from the USD will become a costly affair; therefore, re-dollarization is gaining steam. The majority of the exporters are now willing to take the risk, as the global market is already in muddy waters.

Re-dollarization is a phenomenon where the de-dollarization agenda is not making any sense to exporters. The US dollar remains the premier destination for payments due to its stronger nature. Political speeches from leaders on using local currencies do not sit well with exporters. They are in line with managing their business, and local currencies do not help them bring in bigger revenues.