De-Dollarization: The Greenback ‘Rivals’ in The Making
Summary
- De-dollarisation has intensified across the world. BRICS countries are working on creating a new form of currency or payment to replace the dollar in foreign trade. Meanwhile, more bilateral and multilateral agreements for the use of local currency are signed by BRICS and Asian Countries.
- China targets the greater yuan use in Belt and Road Countries to combat US dollar hegemony. The latest support from Russia can further push the use of the yuan.
- Revived Asian Monetary Fund proposal to limit dependency on the US dollar: China is open to discussion, while Indonesia responds cautiously.
- Local currency settlement (LCS) values are increasing but remain small in Indonesia. High corporate external debt in the US dollar is among the factors that hold back export transactions under the LCS scheme. Major export clients’ currency preferences will be a game changer.