The de-dollarization trend has been fast taking hold on a global level. Although the greenback continues to dominate international trade, talks about alternate currencies have flooded international relations. Several nations have already begun using respective national currencies for mutual businesses. Iran and Russia are the latest to officially ditch the US dollar, opting to use national currencies for trade. Iran and Russia are both part of the BRICS bloc of countries. BRICS nations are spearheading the global de-dollarization movement.
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De-Dollarization: Sanctions Pushing The US Dollar Out Of The Picture?
According to Mohammad Reza Farzin, “We (BRICS members Iran and Russia) have entered into a currency agreement with Russia and fully removed the US dollar. Now we only trade in rubles and rials.”
Both Russia and Iran face severe sanctions from Western countries. The development makes it incredibly difficult to use the greenback for trade. In July 2024, central banks from both nations agreed to a currency swap policy. It would appear that sanctions may be further pushing the de-dollarization movement.
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Russia and Iran have also integrated the Mir payment system as an alternative to SWIFT. Russia has also allowed Iranian nationals to withdraw Iran’s rial currency from ATMs. The move further pushes the de-dollarization trend.
Will The US Dollar Be Dethroned?
Despite the global de-dollarization, the US dollar continues to dominate global finances. According to a report by Statista, the US dollar accounts for 88.4% of foreign exchange transaction volume. The dollar also makes up 59% of official foreign exchange reserves.
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Although the de-dollarization movement has taken a strong hold globally, it is unlikely that the greenback will be replaced anytime soon. President-elect Donald Trump’s pro-business stance could rejuvenate the US dollar’s dimming strength.
