The US dollar losing its value on world trade after 20 yrs

 

 

 

The US dollar losing its value on world trade after 20 years, In the year 2022, 90 percent of the world’s foreign trade was done in US dollars, according to the International Financial Institution, IMF. More than 6 trillion dollars in the world’s total trade was done in US dollars in the last 20 years

 

Why is the US dollar losing its value on world trade

 

The issue has attracted the attention of many, and Reuters has written an extensive commentary referring to economists and business experts. According to the experts, the main reason why The US dollar losing its value on world trade after 20 yrs is the fact that the United States seized $640 billion worth of Russian gold which was kept as reserve by Russia, America made this decision following the Russia’s war with Ukraine.

 

Russia has announced that the country will process payments for all the debts she owns to foreign countries with her own currency “Rubles”, and the experts mentioned that the main reason for the decline of the dollar is that many countries of the world took America’s  decision on Russia as a red light and that storing their foreign reserves in dollars only would put their countries in same position as this.

Following to this intuition most of the front lead countries, countries like Saudi Arabia, China, India, Turkey, and other countries, which has the highest reserve wealth in America, have made some arrangements on their US Dollar reserved wealth by transforming to other forms, or by shifting to other countries, Following this, the experts say that the US dollar’s share has decreased and the US dollar losing its value on world trade might continue.

 

Russia on the other hand reached on agreement with China to use their own currencies on any trade exchanges between the countries.

However, the US dollar will continue to be the world’s main trading currency, until its weakening on the sector makes a visual impact on the sector since many countries of the world do not support the idea of world trade falling under the control of a few countries.

It is also stated that the US dominance of the dollar prevents countries from establishing trade relations with the countries that have been sanctioned by Washington, which is another reason for the reduction in the demand for the dollar. The Chinese yuan, the Russian ruble, the Indian rupee, and the UAE dirham are the main currencies that share the world trade share of the dollar in 2022.

 

The IMF warned that the sanctions imposed on Russia could reduce the dominance of the dollar. In addition, the fact that many countries of the world are doing their mutual transactions in their currencies will weaken the share of the US dollar in world trade.

 

Despite all of this new change, the fact that half of the world’s wealth is still in the form of US dollars, that more than half of the world’s trade is facilitated by dollars, and that there is no other currency as acceptable as the dollar, it is stated that the dominance of the dollar will continue.

 

However, it is said that the desire to have a decentralized trading system at the international level and the lack of trust in the US dollar have led countries and businesses to look for additional trading methods and this will continue to put the value of the US dollar, its acceptance throughout the world wide trade and exchange sectors less and less important.