Dedollarization is the current buzz with many investors given recent developments with the BRICS and their potential use of the Chinese renminbi as the currency for trade payments. Russia is adopting RMB invoicing for oil since the dollar is off limits. Brazil has used the RMB for some trade invoices given the large trade relations between the two countries. Saudi Arabia has started to invoice some oil exports in RMB. Clearly, there has been some movement away from the dollar, but the reasons are mainly political and not based on the declining value of the dollar; nevertheless, regardless for the reason, some countries are choosing an alternative to the dollar. While a trickle, there is a growing view by non-US aligned countries that it may be in their interests to have new choices for invoicing, payments, and pricing.
We have heard about the dollar demise before. It is a recurring theme that has not played out in actual behavior. Yet, if the US government and the Fed ignores the problem, the trickle can become a deluge.
Dollar debt still dominates the world's financial markets. Dollar reserves with central banks also are still dominate, and the desires for dollar swap lines are still strong when liquidity is needed. Figures are from Dedollarization is Not a Thing
Still, changes in trade invoicing and settlement are a canary in a coal mine signal that the trade and finance world may become multi-polar. Trade invoicing and payment flows serve as a foundation for a switch in financial flows.
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