Almost everyone in the world knows the US dollar power and dominance. It is used in trade, reserves and even as safest asset or currency after Gold. But since last 5 years we are seeing a quiet and slow Anti-Dollar movement. It may be from BRICS nations or either from China and its allies. Sanctions over Russia increased the pace of movement.
So a question arises: Are we moving towards de-dollarization, where the dollar’s dominance finally faces real competition?
The US Dollar’s Grip
Across the countries it is one of the hot topic “De-Dollarization” but it is not as simple as it is looking because 60% of the global foreign exchange reserves is in dollar, according to IMF. Even Oil, Gold and other commodities are still priced in dollars throughout the nations.
Yes, many countries are showing concerns after sanctions imposed on Russia over Ukraine war and their 300B USD got freeze. Countries like Iran and Venezuela who are under US sanctions are actively looking for an alternative. Even US ally Saudi Arabia has also shown interest in non dollar trade settlements.
But the fact is the more the US puts sanctions on different countries the more interest in alternative option will countries have.
BRICS and the Local Currency Push
The BRICS countries —Brazil, Russia, India, China, and South Africa—expanded in 2024 by inviting Saudi Arabia, UAE, Egypt, and others. By this expansion, BRICS nations now have control over massive chunk of global oil and commodity markets.
The BRICS nations are giving clear message to US by saying that trade should not be totally dependent on dollar. India and Russia have already started oil trading in Rupees. China is also pushing settlements in yuan with Middle East countries. Even Brazil has started using local currencies for trade with Argentina.
The idea of a “BRICS currency” has been pending for years, but experts believe the near-term shift will be more practical than symbolic—increasing the share of local currencies in bilateral trade rather than launching a single new unit. But reports also says a digital BRICS currency may get introduced by 2026.
The Digital Yuan Experiment
China’s digital yuan (e-CNY) could be the real competitor. Unlike cryptocurrencies, it is a state-backed central bank digital currency (CBDC) designed for both domestic and international use.
Trials have been done and government is pushing to avail it for retail purchases. Reports suggest Chinese companies are exploring cross-border settlements in digital yuan, bypassing SWIFT and dollar channels.
If Beijing succeeds in making the e-CNY efficient and trusted, it could give China unprecedented leverage in global trade—particularly in Asia, Africa, and Belt and Road initiative partner nations.
Sanctions as a Double-Edged Sword
Sanctions over nations are Washington’s favorite foreign policy tool. But this could backfire them as it may lead to dollar’s alternative.
- Russia has deepened its reliance on yuan and rupee settlements.
- Iran has turned to barter trade with China and Turkey.
- Even European allies worry about over-dependence on the dollar, especially after secondary sanctions hit companies dealing with sanctioned states.
In 2025, the risk is that sanctions may accelerate the demand of alternate currency over dollar.
Are We Entering a Multi-Currency World?
According to experts, if anyone is thinking like dollar will be gone and some alternate currency will come but its not looking possible in current scenario instead a multi currency system may arise.
- The dollar will remain dominant but less absolute.
- The euro and yen will retain their regional significance.
- The yuan could expand via digital integration.
- Local currencies in BRICS and other groups will increasingly be used in regional trade.
What 2025 Could Mean for You
- Investors: Greater opportunities in forex but also higher risks. Hedging strategies will become more critical.
- Businesses: Companies engaged in global trade may have to adapt to multiple settlement systems, from dollars to yuan to rupees.
- Governments: Central banks will diversify reserves further, with gold and alternative currencies gaining share.
Conclusion: Currency Wars or Currency Evolution?
Calling it a “ currency war” might be dramatic, but the demand for alternate currency or system is real. 2025 may not witness the collapse of the dollar—but it could mark the beginning of a long transition towards a more balanced, multi-currency world.
As of now dollar is leading but a wrong decision may lead push towards its alternatives and Tariffs imposed on different nations may boost the movement.
