{"id":241308,"date":"2023-05-08T20:43:46","date_gmt":"2023-05-08T15:13:46","guid":{"rendered":"https:\/\/blog.forumias.com\/?p=241308"},"modified":"2023-05-09T15:29:01","modified_gmt":"2023-05-09T09:59:01","slug":"de-dollarisation-will-the-greenback-still-be-green","status":"publish","type":"post","link":"https:\/\/forumias.com\/blog\/de-dollarisation-will-the-greenback-still-be-green\/","title":{"rendered":"De-dollarisation: Will the greenback still be green?"},"content":{"rendered":"\n

Source:\u00a0<\/strong>The post is based on the article\u00a0\u201cWill the greenback still be green?\u201d <\/b><\/strong>published in\u00a0The Hindu\u00a0<\/strong>on\u00a08th\u00a0May 2023<\/b><\/strong><\/p>\n

Syllabus<\/strong>: GS 3 \u2013 Indian Economy and issues relating to planning, mobilization, of resources, growth, development and employment.<\/p>\n

Relevance<\/strong>: About the de-dollarisation debate.<\/p>\n

News<\/strong>: As China, India, and Russia trying to trade using partner currencies for payment instead of the U.S. dollar, various media are also speculating that the demise of the dollar as world reserve currency.<\/p>\n

What is de-dollarisation, what are the global efforts towards the De-dollarisation of trade, and How is India pursuing the de-dollarisation of trade?<\/span><\/h2>\n\n\n\n
Must read:\u00a0De-dollarisation of trade: Opportunities and challenges \u2013 Explained, pointwise<\/a><\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

How dominant is US Dollar in global trade?<\/span><\/h2>\n

China itself has substantial U.S. dollar reserves earned from its trade with the U.S. over the past three decades. China has used these dollar reserves to fund its strategic investments abroad.<\/p>\n

The benefit of dollar premium<\/strong>: Being a supplier of international reserve currency confers a distinct advantage to the U.S. Such as, the US has the ability to borrow at a low interest rate.<\/p>\n

This a)<\/strong> relaxes the fiscal constraint substantially, b)<\/strong> boosts the debt \u00adissuing government\u2019s capacity to borrow more without having to deal with the negative effects of such borrowing on the domestic economy.<\/p>\n

This phenomenon is often referred to as the dollar premium<\/p>\n\n\n\n
Read here: The de-dollarisation debate<\/a><\/strong><\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

About the present share of Forex reserves in the world<\/h2>\n

According to reports from the International Monetary Fund, the dollar\u2019s share of foreign exchange reserves has fallen over time from 80% in the 1970s to about 60% in 2022. The euro has made up for about 20% of the remaining 40%.<\/p>\n

Other currencies such as the Chinese Yuan, Australian and Canadian dollars, Swedish krona, and South Korean won have claimed their share in the portfolios of various countries\u2019 foreign exchange reserves making up most of the remaining gap of 20%.<\/p>\n

Note<\/strong>: China runs a closed capital account. So, it still does not feature as a prominent choice as reserves. Most of the Renminbi reserves that are held outside China are by Russia.\u00a0<\/em><\/p>\n

What are the negative impacts of de-dollarisation?<\/span><\/h2>\n\n\n\n
Read here:\u00a0<\/strong>The possible implications of de-dollarisation of global trade<\/strong><\/a><\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

Can the Chinese Yuan replace the US Dollar?<\/span><\/h2>\n\n\n\n
Read more: De-dollarisation: the race to attain the status of global reserve currency<\/a>\u00a0<\/strong><\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

Why does India hold US Dollar as Forex reserves and not the Russian Ruble?<\/h2>\n

This is because a)<\/strong>\u00a0Even though, India\u2019s biggest supplier of oil is Russia, India’s biggest trading partner is still the U.S., b)<\/strong> Russia\u2019s importance as an oil supplier is a result of the deep discounts offered by its oil suppliers to Indian refiners. Such discounts will not be sustainable in the long run.<\/p>\n

This creates doubt on the long-term viability of a common currency or a reciprocal trading arrangement between India and Russia.<\/p>\n","protected":false},"excerpt":{"rendered":"

Source:\u00a0The post is based on the article\u00a0\u201cWill the greenback still be green?\u201d published in\u00a0The Hindu\u00a0on\u00a08th\u00a0May 2023 Syllabus: GS 3 \u2013 Indian Economy and issues relating to planning, mobilization, of resources, growth, development and employment. Relevance: About the de-dollarisation debate. News: As China, India, and Russia trying to trade using partner currencies for payment instead of… Continue reading De-dollarisation: Will the greenback still be green?<\/span><\/a><\/p>\n","protected":false},"author":10311,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"jetpack_post_was_ever_published":false,"footnotes":""},"categories":[1230,9],"tags":[11499,216,10498],"class_list":["post-241308","post","type-post","status-publish","format-standard","hentry","category-9-pm-daily-articles","category-public","tag-dedollarisation","tag-gs-paper-3","tag-the-hindu","entry"],"jetpack_featured_media_url":"","views":"","jetpack_sharing_enabled":true,"_links":{"self":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/posts\/241308","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/users\/10311"}],"replies":[{"embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/comments?post=241308"}],"version-history":[{"count":0,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/posts\/241308\/revisions"}],"wp:attachment":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/media?parent=241308"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/categories?post=241308"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/tags?post=241308"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}