Last Updated: April 17, 2023, 16:01 IST
Washington, United States
US Treasury Secretary Janet Yellen speaks to the press at the US Treasury Department in Washington, US.
The US Dollar is on the verge of losing its shine in the global market as Russia has been vocal in using trade in local currency for the overall process of ‘de-dollarisation’
US Treasury Secretary Janet Yellen has said that economic sanctions imposed against Russia and other countries by the United States put the dollar’s dominance at risk as targeted nations seek out an alternative.
“There is a risk when we use financial sanctions that are linked to the role of the dollar that over time it could undermine the hegemony of the dollar,” Yellen said in an interview on CNN.
“Of course, it does create a desire on the part of China, of Russia, of Iran to find an alternative,” she said.
“But the dollar is used as a global currency for reasons that are not easy for other countries to find an alternative with the same properties,” she added.
Her statement comes as the US Treasury and State Departments sanctioned around 120 targets, including Chinese, UAE and Turkish firms to squeeze Russia for its ongoing war with Ukraine.
Yellen, however, noted that sanctions are an “extremely important tool,” all the more so when used by the United States and its allies as “a coalition of partners acting together to impose these sanctions.”
The US has led the West in imposing sanctions against Russia after Kremlin launched the “special military operation” against Ukraine on February 24, 2022.
The sanctions led to a commodity crisis and trade in local currencies is being seen as a viable solution to avoid sanctions without impacting supply chains and global trade flows.
The US Dollar is on the verge of losing its shine in the global market as Russia has been vocal in using trade in local currency for the overall process of “de-dollarisation”.
Meanwhile, China is actively trying to present Yuan as an alternative to the dollar. China’s yuan has surpassed the US dollar as the most traded currency in Russia as Moscow continues to deepen its political and economic ties with Beijing.
Iran has also completely abandoned US dollar trade with China and Russia. Saudi Arabia also said it will completely give up PetroDollar and will start accepting PetroYuan.
India has also been supporting the idea of trade in local currency to boost exports. In March, the Indian government said as many as 18 countries – including Russia, Sri Lanka, UK – have expressed interest in settling overseas trade with India in Indian rupee.
However, some experts say that the US dollar will not lose its dominance to other currencies. According to Carson Group, US dollar’s role in the global economy is not at risk of ending.
The company said that the size of the US economy and the strength of the US economy enables the confidence in the US and therefore the US dollar. It added that the Dollar is the world’s most popular medium of exchange in terms of trade and is even powerful beyond North and South America.
(With inputs from agencies)
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