Apparently, the days of US dollar hegemony are numbered as multiple states have adopted alternative currencies in international transactions in a bid to minimize or eliminate the influence of the greenback.
The share of US dollar reserves held by central banks fell to 59 percent—its lowest level in 25 years—during the fourth quarter of 2020, according to the International Monetary Fund.
The data shows the declining role of the American currency in the global economy.
The Islamic Republic has announced its decision to move away from the US dollar and has acted on the decision in cooperation with other independent countries.
The Leader of the Islamic Revolution touched on the weakening of the US dollar during the meeting on the 13th day of the holy month of Ramadan (April 4) in Tehran, noting “some countries that have separated themselves from the dollar…have also improved their situation.”
In this regard, Iranian President Ebrahim Raeisi has asked the Central Bank of Iran to lay the ground for conducting foreign trade transactions using Iran’s national currency rial.
At the 51st Asian Clearing Union (ACU) summit held in Tehran in May, Iranian Vice-President Mohammad Mokhber said that dollar domination is on the verge of collapse, noting that de-dollarization is an inevitable response of countries to a project by the United States to weaponize its dollar.
The Central Bank of Iran (CBI) is seriously pursuing the policy of de-dollarization and intends to use alternative options to expedite the global trend, CBI Governor Mohammadreza Farzin said in early May.
The chief banker has also said that de-dollarization is a strategic policy pursued by the CBI, adding that the US is exploiting the dollar as a political tool.
“The path initiated to reduce the influence of the dollar in regional and international transactions, which many countries are joining, will minimize Western dominance over the world economy,” then Secretary of Iran’s Supreme National Security Council, Ali Shamkhani said in a meeting with the Russian President’s Special Aide Igor Levitin, who was on a two-day visit to Tehran in Early April.
Iran, however, is not the only country that seeks to ditch the dollar in its foreign trade.
For instance, the central banks of South Korea and Indonesia have recently signed an MoU to cooperate on promoting the use of their currencies in bilateral transactions, such as current account transactions and direct investment, according to Reuters.
On April 23, Russian Ambassador to Iran Alexey Yurievich Dedov said in an interview that “we should take into consideration the difficulties the countries face in dollar transactions because of the sanctions.”
De-dollarization process will continue and expand, he said, adding that “even the French president announced recently that Europe should reduce its dependence on the dollar.”
Amid the BRICS collective’s push to eliminate the reliance on the US dollar, Russian Finance Minister, Anton Siluanov, stated that over 70% of trade between China and Russia is settled in their respective local currencies.
The Global Times in late May reported Siluanov’s statements that the countries have utilized the Russian Ruble and Chinese Yuan for trade settlements.
China’s top diplomat in Iran, in an interview with the Iranian media in April, said that the US dollar is in its weakest position ever as many countries have lost confidence in the currency.
That is a result of the United States using the dollar as a means of economic bullying, said Chang Hua, adding that many developing countries are seeking to distance themselves from dollar-based international trade.
The Syrian president said in late April that the confrontation with the US and the West has been economic in the first place, which makes it increasingly necessary to discard the US dollar in transactions, and that BRICS countries can play a leading role in this area, as well as the option of adopting the Chinese yuan for trade transactions between countries.
Argentina, as another example, has declared that it would pay for Chinese imports in yuan instead of dollars to preserve its international reserves.
Brazilian President Luiz Inácio Lula da Silva has lately highlighted the significance of efforts to ditch the dollar in trade throughout the world.
The single currency proposed by Lula would apply to the Mercosur trade bloc, comprised of Argentina, Brazil, Paraguay, and Uruguay, in Lula’s vision, CNN reported.
Indian policymakers have recently taken several steps towards shifting away from the greenback to rubles and rupees in mutual trade with sanctions-hit Russia. The nation has also agreed to switch to a rupee payment mechanism for Iranian crude imports. Malaysia is the latest nation to agree to settle trade with India using the rupee.
US admits declining position of dollar in world
The United States treasury secretary has warned that economic sanctions imposed on other countries like Russia and Iran threaten the dominance of the dollar in the global economic market.
“There is a risk when we use financial sanctions that are linked to the role of the dollar that over time it could undermine the hegemony of the dollar,” Janet Yellen said on CNN on Sunday.
“Of course, it does create a desire on the part of China, of Russia, of Iran to find an alternative,” the source added.
The global trend of substituting the US dollar with local currencies in trade transactions is speeding up as more countries are ditching the greenback.
The competition between de-dollarization and the weaponization of the dollar is currently heated. Seemingly, the end of US dollar hegemony has approached.
Reported by Tohid Mahmoudpour