USA Dollar

3 Reasons Why Other Countries Are Ditching the US Dollar 


The US dollar seems to be standing at a precarious threshold. With concepts like de-dollarization floating in the space, the USD is now being threatened from all corners and verticals. These verticals comprise various new elements fueling narratives for the dollar’s collapse by planning a possible insurgence against the American currency. 

The US economy is showing signs of potential decline. While the Fed is anticipating cutting rates three times a year, driving the potential for inflation to spark up, the USD has now become a nucleus of speculation, with other currencies giving it stark competition. 

Also Read: Chinese Yuan Officially Outperforms the US Dollar

Why Are Countries Ditching the US Dollar?

USD bank noteUSD bank note
Image Source: Unsplash

The US dollar is gradually losing its purchasing power. As outlined by pragmatic capitalism, the US dollar has lost 99% of its purchasing power since 1913. The stark metric fall in the power of the dollar is compelling users and investors to explore other alternatives. Here’s why the USD is now declining and being ditched by other countries and nations. 

1. US Sanctions 

The United States has long been pressing other nations, limiting their functionalities by imposing heavy sanctions. The sanctions levied on nations have contributed to the erosion of foreign alliances, isolating the US and the dollar from embracing major contemporaries and allies. The list includes sanctions imposed on Iran, Russia, Cuba, North Korea, Belarus, Sudan, Ukraine, and many more. The idea of the US being the supreme entity led other nations to join forces, possibly fueling the BRICS narrative to gather pace and momentum. 

2. US Debt

us debt dollar capitol hill usdus debt dollar capitol hill usd
Source: The Hill

A recent WBMA report outlined that the US is currently under debt worth $34 trillion. The report further outlines the potential for the metrics to breach the $35 trillion debt mark soon, which could ultimately deepen the US economic turmoil. The development will further weaken the value of the US dollar, leading investors and nations to explore other robust currencies to hedge and stake in.

3. The Rise of Local Currencies

us dollar chinese yuan currency bricsus dollar chinese yuan currency brics
Source: AFP

With the US dollar’s declining status as a reserve currency, investor sentiment is now pivoting towards exploring the “multipolar” currencies to ensure diversification of assets. This includes exploring the market for regional currencies and trading in local moolah to ensure consistent demand and profit flow. This narrative is giving birth to the rise of local currency, with the Chinese Yuan, Kenyan Shilling, and Ruble topping the race to beat the USD. 

Investors have also started to explore gold and other currencies as a hedge against inflation ditching the US dollar. The calls for de-dollarization have intensified, with Russian PM Vladimir Putin urging the Middle East oil producers to promote trade with regional currencies instead of the USD. 

Also Read: Gold’s Increasing Price Momentum Spells Trouble For The US Economy





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