top of page

Global Trade- Non-Dollar Journey Begins

Post breakout of the Russia- Ukraine conflict, a number of sanctions were applied by the West and allies on the Russian trade. This exposed the large level of vulnerability that all counties ignored for years and that is doing trade only in US dollars. A dominance that not only gives it the power to dictate oil trade but also non-oil trade.


The oil trade was 5.44% of the global trade in 2019 happens to be done only in US dollars which is why the term petrodollar was coined. But this trend did not remain limited to oil and it spread through the products due to the usage of the SWIFT system resulting in 90% of total world trade happening in US dollars.


This is will change in near time and the groundwork for such a massive transition is already taking place. Within the past week, Saudi has mentioned its willingness to provide oil in a non-dollar currency. Brazil and Argentina along with BRICS are planning their respective bloc currencies. Even UAE had expressed willingness to trade non-oil products in other currencies.


All these are still in the early stage but as they say, something is better than nothing. Over the next decade or so as the implementation of these plans starts especially through Central Banks' Digital Currency then the world trade will see a large switch to non-dollar within a short period.


Along with such a transition might come some level of relief to the currency leg inflation that is part of the problem over previous economic cycles, especially for developing nations.

Σχόλια


bottom of page