The days of US dollar hegemony appear to be numbered as multiple countries have adopted alternative currencies to the US dollar for international transactions.
The US Dollar’s position as the primary global reserve currency is being challenged. This is because several countries have started to ditch dependency on the dollar and strengthen bilateral relations.
This is a trend that is known as de-dollarization.
The Kingdom of the dollar shrinks
According to the IMF, the dollar weighted foreign exchange reserves has fallen to around 60%, a relatively low level, over past few decades, and the trend is accelerating.
There are a number of reasons for this. Let’s start with the most pressing issue of the day, the war in Ukraine.