According to the American Institute for Economic Research (AIER), de-dollarization has begun.
We’re seeing that as more and more countries turn away from the dollar, trying to lower their dependency on the greenback.
Among the many countries taking steps toward becoming less dependent on the American currency are China, Russia, Brazil, and Malaysia.
Let’s take a look at each one.
Since the start of the Russia-Ukraine War, China’s yuan has replaced the dollar as the most traded currency in Russia.
According to Bloomberg, trading volume for the yuan topped the dollar’s for the first time ever in February. Data indicates that the disparity became even more significant in March.
Experts say the uptick in yuan trading comes as Western sanctions continue to weigh on Russia’s economy.
At the end of March, China and Brazil struck a deal to begin trading in their own currencies instead of the dollar.
The agreement will now allow the countries to carry out trade and financial transactions by directly exchanging yuan for reais—and vice versa—rather than first converting their currencies to the dollar, Fox Business reports.
Now Malaysia is talking with China about reviving a decades-old proposal to create an Asian Monetary Fund to reduce their dependency on the dollar.
Malaysian Prime Minister Anwar Ibrahim said, “There is no reason for Malaysia to continue depending on the dollar.”
According to the AIER, Malaysia and India also started using the rupee to settle certain trades.
Why Are Countries Shifting From the Dollar
Countries around the world are questioning the economic stability and monetary policy decisions of the U.S.
The AIER reports that America’s monetary policy response to the 2008 financial crisis saw the dollar’s value whipping around unpredictably, and the response to the outbreak of COVID was even more frenetic.
The COVID pandemic brought even more questionable decisions by the Fed, which caused inflation to reach highs not seen in 40 years.
How Does This Impact You?
When that happens, the dollars in your savings account lose value, meaning that those dollars you worked so hard for are worth less.
According to Charles Schwab, the dollar has been declining over the past six months.
Eurizon SLJ Capital’s Stephen Jen warns that inflation is still a major threat to the already dwindling dollar.
He says that the dollar could weaken by 15% over the next 18 months.
Those threats could further chip away at your savings.
Why Turn to Gold
More investors are turning to proven safe-haven assets like gold and silver to help preserve and protect their wealth.
Well, there are a few reasons. First, history shows that as inflation rises and the dollar falls, the price of gold increases. Investors gravitate toward the metal because of its enduring, physical value, which can’t be easily manipulated like stocks or currencies. Gold is also widely recognized, which gives it liquidity.
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This type of IRA could help protect your hard-earned wealth from inflation and economic downturns, such as the SVB collapse.
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