{"id":143202,"date":"2025-11-20T08:46:10","date_gmt":"2025-11-20T08:46:10","guid":{"rendered":"https:\/\/www.newsbeep.com\/il\/143202\/"},"modified":"2025-11-20T08:46:10","modified_gmt":"2025-11-20T08:46:10","slug":"dollar-dominance-at-end-global-south-losing-faith-says-report-from-trump-tariffs-to-fed-bullying-heres-why","status":"publish","type":"post","link":"https:\/\/www.newsbeep.com\/il\/143202\/","title":{"rendered":"Dollar dominance at end? Global south losing faith, says report \u2014 from Trump tariffs to Fed bullying, here’s why"},"content":{"rendered":"

The global south is losing faith in the United States Dollar <\/a>(USD), according to a Bloomberg report for the New Economy Forum, which added that President Donald Trump’s decisions have further damaged the USD’s prospects.<\/p>\n

It acknowledged that in terms of raw power \u2014 position as the world’s biggest economy and a formidable military \u2014 the dollar retains top backing. This is also evidenced in the various investments Donald Trump<\/a> has elicited from countries and corporations.<\/p>\n

However, drop in Dollars parked in global forex reserves, a key metric, shows that the Dollar may be on its way out as the world’s most dominant currency.<\/p>\n

Also Read | PM-KISAN Scheme 21st instalment released \u2014 How to check \u20b92,000 deposit<\/a>Why has global south lost confidence in US Dollar?<\/p>\n

Listing reasons due to which the world’s seems to be looking for alternatives aside from the dollar, the report said that wariness has increased as the US slapped tariffs on all countries \u2014 friends and foes alike, the White House continues to \u201cbully\u201d the Federal Reserve<\/a> (Fed) \u2014 which is the US’ central bank, debt is rising, and the US has seen a number of pacts with Middle Eastern countries crumble.<\/p>\n

In contrast, China has kept its exchange rate flexible, shaving off the need to hoard dollars, and the Gulf countries have directed billions towards infrastructure projects at home and riskier investments abroad \u2014 this removes their reliance on the US Treasury<\/a>.<\/p>\n

Also Read | Larry Summers quits OpenAI board as questions mount over Epstein email link<\/a>What picture does FX reserves paint: Is decline real?<\/p>\n

As per the report, decline in dollar parked in global FX reserves<\/a> paints a dismal picture. In noted that in the early 2000s, the USD accounted for over 70% of global FX reserves, now its below 60%. \u201cIf the euro area wasn\u2019t so fragmented, and the Chinese financial system so closed, alternatives would be more attractive and the decline faster,\u201d it added.<\/p>\n

It further noted that lower support from China and the Middle East will cost the US, as it has \u201creliably recycled\u201d close to $5 trillion of their savings into the debt market to cut borrowing costs by about half a percentage point. This has so far saved taxpayers billions on auto loans and mortgages and made it cheaper for US companies to invest in new ventures.<\/p>\n

Now, however, China <\/a>has stopped buying dollars and may in the future even start selling it. It said that while a gradual retreat would lead to slow increase in US rates, a rapid pullout could cripple the markets. For the Middle East, cheaper oil and megabillion projects closer home will leave little room for US bond inflows.<\/p>\n

\u201cStructural forces that kept the dollar high, US borrowing costs low and Treasury sanctions powerful are reversing. The consequences will be far-reaching,\u201d it warned.<\/p>\n

Also Read | What is the 9-9-6 rule that Narayana Murthy backs for Indian workers?<\/a>Why is the Dollar slipping?<\/p>\n

\u2022 In 2005 future Federal Reserve<\/a> Chair Ben Bernanke offered an explanation for a conundrum: Why did long-term rates keep falling even as the Fed hiked? His \u201cglobal savings glut\u201d hypothesis argued that surplus nations such as China and Gulf oil exporters recycled vast earnings into American debt, boosting demand and making life cheaper for US borrowers.<\/p>\n

\u2022 Twenty years on, the dollar remains the world\u2019s reserve currency, yet the dynamics are shifting. China\u2019s reserves peaked at $4 trillion in 2014 but have since fallen to $3.3 trillion. The Gulf <\/a>has accumulated almost $800 billion in trade surpluses since 2017, yet its reserves are flat.<\/p>\n

\u2022 American assets no longer inspire the same confidence they once did. Government debt is high and rising. Washington slaps tariffs on allies and adversaries. Political brinkmanship leads to government shutdowns. The White House openly challenges its own central bank\u2019s independence, raising fears of high inflation <\/a>eroding the value of dollar holdings.<\/p>\n

\u2022 The dollar was once a shield. Now it\u2019s a sword. After Russia\u2019s 2022 invasion of Ukraine, the US and allies froze $300 billion of Moscow\u2019s assets. That step proved Washington is willing to use the currency for geopolitical leverage\u2014a warning China and Gulf reserve holders can\u2019t ignore.<\/p>\n

Also Read | Alphabet’s Sundar Pichai admits no company immune if AI bubble bursts<\/a><\/p>\n

\u2022 Chinese and American interests are drifting further apart, fueling Beijing\u2019s fears about the safety of its Western investments<\/a>.<\/p>\n

\u2022 In the Middle East, Israel\u2019s strikes on Qatar <\/a>are the latest example of the fraying of the \u201cenergy for security\u201d pact that tied Gulf states closely to the US for decades.<\/p>\n

\u2022 China\u2019s rigid dollar peg once required massive Treasury purchases to stabilize its currency. Since the mid-2010s, Beijing has shifted toward a dirty float, with fewer interventions, which sharply reduces the need to hoard liquid dollar assets. China is also spearheading a shift away from the dollar in global trade, with emerging markets increasingly using local currencies. The yuan\u2019s share in China\u2019s trade invoicing surged to 25% in 2023, from just 2% in 2010.<\/p>\n

\u2022 Current-account surpluses are shrinking as well, leaving less cash to recycle into global markets. China\u2019s balance has plunged to 2.3% of gross domestic product in 2024, from almost 10% in 2007. In some oil states, the shift is more stark: Saudi Arabia<\/a> flipped from lender to borrower.<\/p>\n

\u2022 Soaring domestic spending is draining the petrodollar pool that the Gulf once invested abroad. Qatar poured $300 billion into preparing for the 2022 World Cup. Saudi Arabia may be committing more than $1 trillion to futuristic cities, sports and entertainment. And oil <\/a>money once parked in safe US debt is now chasing riskier bets. With revenue squeezed and spending rising at home, Gulf sovereign wealth funds are steering capital into stocks, mines and real estate instead of simply lending to the US government.<\/p>\n

\u2022 The era of easy foreign savings flowing into dollar assets, suppressing US borrowing costs and giving Washington a powerful sanctions lever, is moving slowly to a close. That points to higher rates ahead, making the US debt<\/a> burden heavier, its investments at home more expensive and its policy choices abroad more restricted.<\/p>\n

(With inputs from Bloomberg)<\/p>\n

Key Takeaways<\/p>\n

The U.S. Dollar’s dominance is challenged by rising geopolitical tensions and economic policies.Countries are increasingly seeking alternatives to the dollar, impacting global finance.Changes in foreign investments and reserve allocations signal a shift in currency reliance.<\/p>\n","protected":false},"excerpt":{"rendered":"The global south is losing faith in the United States Dollar (USD), according to a Bloomberg report for…\n","protected":false},"author":2,"featured_media":143203,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[11],"tags":[114,1657,88169,88171,88168,88170,184,84544,25291,23620,85,88172,46,40042,88167],"class_list":{"0":"post-143202","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-economy","8":"tag-business","9":"tag-china","10":"tag-china-reserves","11":"tag-currency-alternatives","12":"tag-dollar-dominance","13":"tag-economic-statecraft","14":"tag-economy","15":"tag-foreign-reserves","16":"tag-geopolitical-tensions","17":"tag-global-south","18":"tag-il","19":"tag-international-finance","20":"tag-israel","21":"tag-u-s-dollar","22":"tag-united-states-dollar"},"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/il\/wp-json\/wp\/v2\/posts\/143202","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/il\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/il\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/il\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/il\/wp-json\/wp\/v2\/comments?post=143202"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/il\/wp-json\/wp\/v2\/posts\/143202\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/il\/wp-json\/wp\/v2\/media\/143203"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/il\/wp-json\/wp\/v2\/media?parent=143202"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/il\/wp-json\/wp\/v2\/categories?post=143202"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/il\/wp-json\/wp\/v2\/tags?post=143202"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}