In recent years, a significant trend has emerged in the global economy: several countries are actively seeking to reduce their dependence on the US dollar. This shift, driven by a mix of geopolitical, economic, and strategic factors, is reshaping international trade and finance.
The movement away from the US dollar, also known as de-dollarization, reflects a desire for greater economic sovereignty and resilience against potential economic sanctions. Below, we explore how different countries are pursuing this strategy.
China

As the world’s second-largest economy, China has a vested interest in promoting the use of its currency, the renminbi (RMB), in global trade and finance. According to the Society for Worldwide Interbank Financial Telecommunication (SWIFT), the RMB was the fifth most-used currency for global payments in 2022, accounting for 2.25% of transactions.
The launch of the Cross-Border Interbank Payment System (CIPS) in 2015 was a strategic move to facilitate RMB-denominated transactions, aiming to compete with the SWIFT system dominated by the US dollar.
As of the end of January 2022, CIPS reported that approximately 1,280 financial institutions across 103 countries and regions are connected to the system. This includes 30 banks in Japan, 23 banks in Russia, and 31 banks from African nations that receive yuan funds through infrastructure projects under Beijing’s Belt and Road Initiative. Additionally, China has been accumulating gold reserves as part of its strategy to diversify away from the US dollar. As of March 2024, China’s gold reserves stood at approximately 2,262 metric tons.
Russia

Russia’s de-dollarization efforts have been particularly pronounced following the imposition of Western sanctions in response to its annexation of Crimea in 2014. The Russian government has been actively reducing its holdings of US Treasury securities, from over $10.51 billion in 2020 to just $46 million in April 2024. In 2020, Russia’s National Wealth Fund shifted its assets from US dollars to euros and yuan, with the share of US dollars in the fund dropping from 45% to zero. Furthermore, In 2021, the trade turnover between Russia and China in national currencies reached $146.887 billion, marking a 35.8% increase compared to 2020.
European Union

The European Union (EU) has been seeking to bolster the international role of the euro, which currently accounts for about 20% of global foreign exchange reserves. In 2020, the European Commission published a strategy to strengthen the international role of the euro, which includes measures to develop the EU’s financial infrastructure and reduce dependence on non-European financial centers.
The EU has been promoting the use of the euro in energy transactions, particularly in the context of its Green Deal initiatives, aiming to reduce reliance on the US dollar in critical sectors. Additionally, the EU is working to create a more integrated European financial market, enhancing the euro’s attractiveness as a global currency.
India

The Reserve Bank of India (RBI) has been negotiating currency swap agreements with various countries to facilitate trade in local currencies. As of 2021, India had agreements with Japan, the UAE, and Sri Lanka, among others.
India has also been promoting the use of the rupee in trade with countries in its region, including efforts to conduct trade with Iran and Russia in rupees, especially for oil imports. According to the Press Trust of India, no oil trades were settled in rupees during the 2022-2023 financial year. Similar to China, India has been increasing its gold reserves.
Turkey

Turkey has also been promoting the use of its national currency, the Turkish lira, in international trade. The country has been pushing for the use of the lira in trade with neighboring countries, including agreements with countries like Iran and Azerbaijan. Turkey has signed currency swap agreements with several countries, including Qatar and China, to facilitate trade in local currencies and reduce dependence on the US dollar.
Iran

Iran has been forced to pursue de-dollarization due to extensive US sanctions that limit its access to the international financial system. Iran has been conducting trade with countries like China, India, and Russia using alternative currencies such as the euro, yuan, and rupee, which helps Iran circumvent US sanctions. To mitigate the impact of sanctions, Iran has also turned to gold and barter trade, including exchanging oil for goods and services with countries willing to bypass the US dollar. Additionally, Iran has strengthened its economic ties with non-Western countries, creating a network of trade partners that are less influenced by US economic policies.
Nigeria

The country has been pushing for the use of the naira in international trade to mitigate the impact of dollar volatility on its economy. The Central Bank of Nigeria (CBN) has been promoting the use of the naira in bilateral trade agreements, particularly within the African continent. Nigeria signed a currency swap agreement with China worth $2.5 billion in 2018 to become the third African country, enabling both countries to trade directly in their local currencies.
Saudi Arabia

The Kingdom has considered pricing its oil exports in currencies other than the dollar, particularly the Chinese yuan, as part of its broader economic diversification strategy under Vision 2030. In 2020, China accounted for 26% of Saudi Arabia’s crude oil exports, becoming the largest oil supplier to China. Saudi Arabia’s Public Investment Fund (PIF) has been diversifying its investment portfolio, reducing the share of US dollar-denominated assets and increasing holdings in other currencies and asset classes. This strategy aims to reduce economic risks associated with fluctuations in the dollar and enhance financial stability.
Brazil

The country has established a currency swap agreement with China worth $30 billion, facilitating trade between the two nations without relying on the US dollar. Additionally, Brazil has been increasing its gold reserves, with the Central Bank of Brazil holding approximately 129.6 metric tons of gold as of 2021. This move is part of a broader strategy to diversify its foreign exchange reserves and reduce vulnerability to dollar fluctuations.
South Africa

The country is part of the BRICS group (Brazil, Russia, India, China, and South Africa), which has been collectively exploring ways to reduce dollar dependency. In 2019, the BRICS countries announced the creation of a BRICS Payment System to facilitate trade among member countries using their local currencies. South Africa has also been increasing its gold reserves, with the South African Reserve Bank holding approximately 125.3 metric tons of gold as of 2021, supporting its strategy to diversify foreign exchange reserves.
Argentina

In recent years, Argentina has been increasingly using the Chinese yuan for trade transactions. In 2020, Argentina and China expanded their currency swap agreement to $18.5 billion, allowing Argentina to bolster its foreign reserves and facilitate trade in yuan. Argentina has also sought to increase its gold reserves, with the Central Bank of Argentina holding approximately 61.7 metric tons of gold as of 2021, as part of efforts to diversify its foreign exchange reserves and reduce vulnerability to dollar fluctuations.
Indonesia

The country has promoted the use of the Indonesian rupiah in international trade, particularly within the ASEAN region. Indonesia has established local currency settlement agreements with several countries, including Malaysia, Thailand, and Japan, to facilitate trade using local currencies. In 2020, Indonesia and China signed a currency swap agreement to further promote trade in their respective currencies.