Dedollarization! … dedollarization! Is the dominance of the dollar really threatened?

With the ambition of the BRICS to shed its grip and given its current weaknesses, is the dollar in danger of losing its hegemony? Like wildfire, the dedollarization movement is spreading and raising questions. Analyst Vikram Rai predicts the turn that events could take and it may not be favorable to the dollar according to him.

The dollar reigns supreme, but not for long

Senior economist at financial services firm TD, Vikram Rai thinks that even if dedollarization accelerates, the dollar retains its dominance for now. For the analyst, the American currency is still the most “dominant and the most used”.

However, his long-term analysis is quite different. He foresees a loss of ground for the dollar due to the manifest ambition of certain countries to reduce their dependence on this currency. Vikram Rai says, “Several countries have grown frustrated with the dominance of the dollar and are looking for alternatives for conducting international trade and cross-border banking.”

He explain that the freezing of foreign exchange reserves by the Russian central bank was a triggering event and pushed certain countries to redouble their efforts to extricate themselves from the domination of the dollar. The leaders of the BRICS nations will also discuss their plan to create a single currency at the next summit of the economic group. Even if Vikram Rai thinks that this project will not materialize, he foresees the end of the domination of the dollar in favor of other currencies.

The yuan, the euro and the cryptos: the future masters?

According to the analyst, the yuan, the euro and cryptocurrencies have great potential and could replace the dollar. “The biggest competitors of the dollar today are the euro and the yuan,” he said before discussing the potential of digital currencies.

“Cryptos, including those from central banks (CBDC), pose another threat to dollar dominance. The widespread adoption of other digital currencies could erode the dominance of the dollar by ending the need to use it as a means of payment,” said Vikram Rai.

If the rating agency Moody’s recently suggested that there was no competing currency to compete with the dollar, Vikram Rai’s analysis revives the debate. Be that as it may, transformations in the international financial landscape are now almost inevitable, and it is therefore important to monitor these trends closely.