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23-12-2022, 11:51 AM
UPDATED DEC 22, 2022, 7:27 PM SGT
SINGAPORE – King Dollar is facing a revolt.
Tired of a too-strong and newly weaponised greenback, some of the world’s biggest economies are exploring ways to circumvent the United States currency.
Smaller nations, including at least a dozen in Asia, are also experimenting with de-dollarisation.
In addition, corporates around the world are selling an unprecedented portion of their debt in local currencies, wary of further US dollar strength.
No one is saying the greenback will be dethroned any time soon from its reign as the principal medium of exchange.
But not too long ago, it was almost unthinkable for countries to explore payment mechanisms that bypassed the US currency or the Swift network that underpins the global financial system.
Now, the sheer strength of the dollar, its use under President Joe Biden to enforce sanctions on Russia in 2022 and new technological innovations are together encouraging nations to start chipping away at its hegemony.
“The Biden administration made an error in weaponising the US dollar and the global payment system,” Mr John Mauldin, an investment strategist and president of Millennium Wave Advisors, wrote in a newsletter last week.
“That will force non-US investors and nations to diversify their holdings outside the traditional safe haven of the US.”
......
Plans already under way in Russia and China to promote their currencies for international payments
......
Moscow, for example, began seeking remuneration for energy supplies in roubles.
......
Bangladesh, Kazakhstan and Laos were also stepping up negotiations with China to boost their use of the renminbi. India began talking up more loudly the internationalisation of the rupee and, just this month, started securing a bilateral payment mechanism with the United Arab Emirates (UAE).
......
It is not just the sanctions that are helping to accelerate the de-dollarisation trend. The US currency’s rampant gains have also made Asian officials more aggressive in their attempts at diversification.
......
The dollar’s strength is a huge headache for Asian nations who have seen prices of food purchases soar, debt-repayment burdens worsen and poverty deepen.
Sri Lanka is a case in point, defaulting on its dollar debt for the first time ever as a soaring greenback crippled the nation’s ability to pay up. Vietnamese officials at one point blamed dollar appreciation for fuel supply struggles.
......
dollar-denominated bond sales by non-financial companies have dropped to a record-low 37 per cent of the global total in 2022. They have accounted for more than 50 per cent of debt sold in any one year on several occasions in the past decade.
......
Malaysia, Indonesia, Singapore and Thailand have set up systems for transactions between one another in their local currencies rather than the US dollar. Taiwanese can pay with a QR code system that is linked with Japan.
......
it is unlikely the dollar’s dominant position will be challenged any time soon. The strength and size of the US economy remain unchallenged
......
The renminbi’s share of all foreign-exchange trades, for example, may have climbed to 7 per cent, but the dollar still makes up one side of 88 per cent of such transactions.
......
King Dollar may still reign supreme for decades to come, but the building momentum for transactions in alternate currencies shows no sign of slowing
https://www.straitstimes.com/business/su...-us-dollar
SINGAPORE – King Dollar is facing a revolt.
Tired of a too-strong and newly weaponised greenback, some of the world’s biggest economies are exploring ways to circumvent the United States currency.
Smaller nations, including at least a dozen in Asia, are also experimenting with de-dollarisation.
In addition, corporates around the world are selling an unprecedented portion of their debt in local currencies, wary of further US dollar strength.
No one is saying the greenback will be dethroned any time soon from its reign as the principal medium of exchange.
But not too long ago, it was almost unthinkable for countries to explore payment mechanisms that bypassed the US currency or the Swift network that underpins the global financial system.
Now, the sheer strength of the dollar, its use under President Joe Biden to enforce sanctions on Russia in 2022 and new technological innovations are together encouraging nations to start chipping away at its hegemony.
“The Biden administration made an error in weaponising the US dollar and the global payment system,” Mr John Mauldin, an investment strategist and president of Millennium Wave Advisors, wrote in a newsletter last week.
“That will force non-US investors and nations to diversify their holdings outside the traditional safe haven of the US.”
......
Plans already under way in Russia and China to promote their currencies for international payments
......
Moscow, for example, began seeking remuneration for energy supplies in roubles.
......
Bangladesh, Kazakhstan and Laos were also stepping up negotiations with China to boost their use of the renminbi. India began talking up more loudly the internationalisation of the rupee and, just this month, started securing a bilateral payment mechanism with the United Arab Emirates (UAE).
......
It is not just the sanctions that are helping to accelerate the de-dollarisation trend. The US currency’s rampant gains have also made Asian officials more aggressive in their attempts at diversification.
......
The dollar’s strength is a huge headache for Asian nations who have seen prices of food purchases soar, debt-repayment burdens worsen and poverty deepen.
Sri Lanka is a case in point, defaulting on its dollar debt for the first time ever as a soaring greenback crippled the nation’s ability to pay up. Vietnamese officials at one point blamed dollar appreciation for fuel supply struggles.
......
dollar-denominated bond sales by non-financial companies have dropped to a record-low 37 per cent of the global total in 2022. They have accounted for more than 50 per cent of debt sold in any one year on several occasions in the past decade.
......
Malaysia, Indonesia, Singapore and Thailand have set up systems for transactions between one another in their local currencies rather than the US dollar. Taiwanese can pay with a QR code system that is linked with Japan.
......
it is unlikely the dollar’s dominant position will be challenged any time soon. The strength and size of the US economy remain unchallenged
......
The renminbi’s share of all foreign-exchange trades, for example, may have climbed to 7 per cent, but the dollar still makes up one side of 88 per cent of such transactions.
......
King Dollar may still reign supreme for decades to come, but the building momentum for transactions in alternate currencies shows no sign of slowing
https://www.straitstimes.com/business/su...-us-dollar
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