Asian economies speed up shift away from US Dollar

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De-dollarization gains momentum as ASEAN nations expand use of national currencies

Asian countries are accelerating efforts to reduce their reliance on the US dollar in trade and investment transactions, signalling a major shift in the global financial landscape.

According to a recent CNBC report, members of the Association of Southeast Asian Nations (ASEAN) are stepping up the use of national currencies in cross-border dealings. This move aligns with a broader global trend: the US dollar’s share of global foreign exchange reserves has fallen from 70% in 2000 to 57.8% in 2024. Additionally, the US dollar index has declined by over 8% since the start of the year.

Key Drivers Behind the De-Dollarization Push:

• Geopolitical uncertainty: Analysts point to erratic US trade policies during the Trump era and Washington’s aggressive use of sanctions as catalysts prompting countries to seek greater monetary independence.

• Economic sovereignty: Major Asian economies — particularly China — are actively promoting the use of local currencies, such as the yuan, in bilateral trade to shield themselves from external financial shocks.

• Alternative systems: The BRICS bloc (Brazil, Russia, India, China, and South Africa) is developing a new cross-border payment system designed to reduce reliance on SWIFT and bypass the dollar-dominated system.

While these efforts are gaining traction, the US dollar still maintains a dominant position due to the unparalleled depth and liquidity of American financial markets.

However, future trends will largely hinge on US foreign policy. Experts suggest that if Washington takes steps to ease sanctions pressure and restore predictability in its economic diplomacy, the pace of de-dollarization could decelerate.

Still, as global financial centres diversify and new regional alliances strengthen, the shift toward a multipolar currency system appears increasingly inevitable.