A good number of countries have been trying to break the monopoly of the US dollar over the years while many have progressed far and are in good positions.
After restoring the Russia-China friendship and the depreciation of other world currencies against the dollar, people are losing faith in the dollar day by day.
Although it is not easy to introduce a single currency against the dollar, it is possible to reduce the supremacy of the dollar through bilateral agreements and alliance-based decisions, according to a recent report of the BRICS-based New Development Bank.
Meanwhile, the BRICS countries have started inter-currency trading among themselves. Not only BRICS but also non-BRICS countries have also started trading with BRICS nations in regional currencies. In particular, the popularity of the Yuan, Rupee, Ruble, and Riyal as regional currencies was much higher than before.
Economists believe that as the world moves away from the single currency, currency markets will be based on some other standard instead of the US dollar.
Former Iraqi President Saddam Hussein wanted to introduce a gold-based currency for exports instead of the dollar. Enraged by the Americans, US-allied forces invaded Iraq in 2003 and ousted Saddam Hussein.
Libyan President Muammar Gaddafi also suffered a similar fate amid an approach to de-dollarisation. In 2013, China overtook the US in oil imports. Since then, there have been discussions about whether the concept of Petroyuan will be introduced in the world market instead of the concept of Petrodollar.
The move to kick Russia out of the SWIFT currency system and confiscate Russian assets has not been well received by the world’s most economically powerful nations, particularly in the wake of the Russia-Ukraine war.
The rest of the economically powerful countries are losing confidence in the country due to the United States, according to Canada-based media CNBC. As the dollar has become a political tool rather than just an economic one, countries outside the Western world are looking for alternatives to the US dollar.
Recently, political analysts have said that the barrier of globalisation is breaking day by day. Russia trades oil and gas in Rubles. China continues to make every effort to strengthen the Yuan. Recently, the Reserve Bank of India tried to make Rupees an international currency. In this situation, the regional countries approached making G2G (government-to-government) contracts stronger through currency swaps.
Countries are increasingly interested in doing business in their currency rather than the US dollar. Recently Iran-Russia has made such an agreement where the business will be done through real-ruble instead of dollars.
The ranking website Visual Capitalist predicts that the use of gold to determine the value of the currency may be established again because the exchange of regional currencies is increasing except the dollar in the market.
Especially in the last few years, with the rate at which the central banks are increasing the gold reserves, it is easy to understand that they are going to consider gold as a standard of currency, excluding the dollar.
Many people are not able to rely on this currency due to the rate at which the price of the dollar is going through ups and downs, reported news agency Reuters. In addition, the United States has repeatedly used the dollar as a political tool to create an asymmetry over the entire benchmark system. By doing this, countries see gold as the easiest medium of exchange and standard.
According to the latest calculations of the World Gold Council, the rate at which China and Russia have increased their gold reserves in 2023 makes it clear that the two countries can no longer rely on the dollar.
By increasing the reserves, Russia’s reserves currently have 2,333 tons of gold. China has 2,192 tons of gold in its reserves. China alone bought 225 tons of gold last year.
Dhaka University (DU) Professor Rumana Haque opines that the increasing trend of gold reserves in countries like China and Russia hinted a future towards de-dollarisation.
“The world’s major economies have realised that not all eggs can be kept in one pot. That is, it is risky to keep the monetary system dependent only on the dollar. In particular, the way the United States considers the dollar as a political tool against the world’s major economies, these countries are relying on gold, an easily exchangeable currency, instead of relying on the US dollar,” Haque, a faculty of DU economics department, told media.
Not only China and Russia, but the Kingdom of Saudi Arabia, a one-time ally of the United States, cannot trust the country. The golden relationship between the KSA and the US has faded for several reasons, including not helping in the Yemen war, holding the crown prince accountable for Khashoggi’s murder, and so on.
German news agency Deutsche Welle reported that China’s mediation of the Iran-Saudi deal and the Yuan-denominated purchase of fuel signals the end of the dollar’s days. But while it is not guaranteed that the Yuan will replace the dollar, in this case, the value of gold will be far ahead.
The acceptance of the US dollar in determining the price of oil is falling day by day, the currency is depreciating against the dollar at a correspondingly increasing rate. The gold market is much more stable and reliable as opposed to such volatility in the dollar market. Consequently, economically strong countries are now increasing the amount of gold in reserves instead of dollars.
By monetary standards, this hoard of gold is thought to signal the end of the dollar era.
Meanwhile, as the demand for gold is increasing, its price is also increasing in the market. Even though the Federal Reserve has raised the interest rate continuously, there has been indication from many quarters that the rate may be reduced this time.
The relationship between interest rates and gold prices is somewhat inverse, according to Investopedia calculations. When interest rates fall, people’s interest in gold increases as an alternative to various investment vehicles like bonds.
Again, the low-interest rate weakens the exchange rate of the dollar in the currency market, resulting in an immediate decrease in the price of gold in the world market. All in all, the demand for gold increased and the price started to rise.
Economist Professor Mahbubul Mokaddem Akash thinks that the dollar market will collapse if any country overtakes the United States in economic growth in the future.
“But as long as the US economy remains intact, the process will not be easy. But gold can thereby regain its former glory as an easily exchangeable commodity,” he said.
