Is the U.S Dollar in Distress?

Kathmandu: There are numerous of questions arising in global geo politics after powerful grouping of the world’s leading embryonic arcade markets, viz. Brazil, Russia, India, China and South Africa (BRICS). The BRICS employment ambitions to indorse peace, security, development and cooperation.

Likewise, even Brazil and Argentina had already announced about forming a common currency. The nations have agreed to name it as ‘sur’  (South). The currency is planned to be used during the bilateral trade-related transactions in Latin America. It is an effort of the countries to reduce the dependency of US dollar while doing domestic trade.

This just seems like a beginning. Number of questions arises about the US dollar. Whether the US dollar is dropping its control or not? May be Yes there is no disagreement on losing its control. Concern is only about how wild this route will go and in what way long .The major waves will be seen on right annexes of capitalism and American supporter in universal position.

Since the end of the Second World War the US dollar seems dominant currency in the world economy. Central banks round the world using dollar as part of their reserve along with gold and other valuable things to show that they can support their currency. The more the needs of dollars, United States is enjoying the applicability of dollar around the world till todays date.

The data of the Bank of International Settlement shows that the trading in foreign exchange markets in April 2022, greenback were in the favour of America dollars, with the exchange rate of $7.5 trillion per day i.e. 90% of the transactions.

Conversely, there are certainly experiments to the dollar’s supremacy, including the rise of other currencies such as the Chinese yuan, the increasing use of cryptocurrencies, and the potential for shifts in global economic and political power.

The knack of the BRICS nations to develop substitute financial frame, their enthusiasm to encounter the current global monetarist order, and the strength of their political and economic systems will all play a role in determining if they particularly pose a danger to the US exchange.

According to nearly analysts, the emergence of the BRICS nations may result in a more multipolar global monetarist system, which would lessen the control of the US exchange. The forthcoming of the US greenback and the international financial system should not be projected at this spell, it is crucial to evoke that this is a convoluted and unlike topic.

Similarly, the International Monetary Fund’s (IMF), central banks reserved only 59% of US dollars in the fourth quarter of 2020, which is regarded as the lowest level in the past 25 years. The terrible kind of financial crash was seen back in 2008, popularly known as the Great Recession.

Although the stats of US dollar have not signaled such worst condition, but various nations along with BRICS have started to realize the depending less on American currency. This might possibly be an alarm for the US economist to come up with concrete plan to increase the transaction in dollars.

As soon as the folks stop exchange on dollar over the in inclusive economy the impact will be large and huge on American economy.

If vacuum will be created in global trading? Who will replace US dollar legacy? Is that Chinese Yuan, Russian Ruble or Indian Rupees? Or will these groups will create common currency, crypto or digital currency.

Analyst says that the Current American condition is self-blamable of this disorders. Situation arises when America impose Economic sanctions in 2014 to Russia that leads to imbalance in smooth functioning of Dollar exchange. Right then other countries too started looking for alternatives.

The answer of how US will tackle it, how will it fill the gap, and what measures will it use to revive the dominance of dollar back in the market would be an interesting economic study for sure.