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| The dominant role of the US dollar in the international trading market is gradually decreasing. (Source: Reuters) |
Strong US sanctions against Russia last year – such as freezing hundreds of billions of dollars worth of reserves – prompted a number of countries to start diversifying their liquidity risk by conducting some transactions in other currencies, Paul Gruenwald explained.
At the same time, these countries also increased their gold reserve activities.
This can be seen through the recent rise of the Chinese Yuan (CNY) in international trade, with many countries choosing to use the Chinese currency to conduct transactions, especially with Beijing and Moscow.
In addition, cheap financing provided by China-based development banks, such as the Asian Infrastructure Investment Bank and the New Development Bank of the world's leading emerging economies (BRICS), is also largely disbursed in yuan.
"The US dollar will continue to be the world's most popular currency, but it will no longer be the only dominant currency," stressed S&P Global's chief economist.
Meanwhile, according to Bloomberg, the reasons for pushing away from the dollar are relatively similar. The greenback is being “weaponized” to punish countries considered rivals or against US interests. This is a warning about dependence on the dollar.
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