Countries around the world, including those in Asia, are reportedly moving away from the U.S. dollar.
De-dollarization is gaining significant momentum in the Asia due to geopolitical uncertainties, diverging monetary policies, and currency hedging strategies.
ASEAN’s
On Wednesday, CNBC reported a growing movement within the Association of Southeast Asian Nations (ASEAN) to conduct trade and investments using regional currencies instead of the dollar.
This initiative was outlined in their recently published 2026-2030 Economic Community Strategic Plan.”
According to the plan, expanding the use of regional currencies in settlements will reduce the impact of exchange rate volatility and help to strengthen regional payment connectivity.
Francesco Pesole, a FX strategist at ING, predicts that the controversial trade policies of U.S. President Donald Trump and the dollar’s rapid devaluation will accelerate the shift to alternative currencies.
While Asia and Southeast Asia are at the forefront of de-dollarization, other regions are also working to reduce their dollar dependence.
The International Monetary Fund (IMF) reported that the dollar’s share of global foreign exchange reserves had dropped from over 70% in 2000 to 57.8% last year.
Since the beginning of Trump’s second term, the dollar has faced significant selling pressure amid policy inconsistencies and ineffective measures.
This year alone, the U.S. dollar index, which measures the dollar’s value against major currencies, has plummeted by over 8%.
Trump’s Dollar Weaponization
While de-dollarization isn’t a new phenomenon, its nature has changed.
Investors and government officials are beginning to realize that the U.S. can and has used the dollar as leverage and weapon in trade negotiations.
Mitul Kotecha, head of FX at Barclays, notes that this awareness is prompting a reassessment and reduction of dollar-heavy portfolios.
Kotecha told CNBC that countries have realized how the dollar has been and could be used as a weapon in trade, direct sanctions, and other areas. He explained that this is a significant shift in perspective over recent months.
The trend of ASEAN countries moving away from the dollar is particularly noteworthy.
Abhay Gupta, a foreign exchange strategist at Bank of America, stated, “De-dollarization in ASEAN is likely to pick up pace, primarily via conversion of FX deposits accumulated since 2022.”
Bank of America reported that residents and businesses in ASEAN countries are actively converting their dollar savings into regional currencies.
Beyond ASEAN, BRICS nations (Brazil, Russia, India, China, South Africa) are developing their own payment system to bypass the U.S.-led SWIFT system.
These efforts ultimately aim to reduce dependence on the dollar.
Separately, China is promoting the yuan as a settlement currency through bilateral trade agreements.
