Trump is accelerating the world's slow drift from dollar dominance | Heather Stewart

"The trade-weighted dollar measured against a basket of global currencies has lost 7% of its value over the past year, despite strong US economic growth and soaring stock prices on Wall Street. That partly reflects the outlook for inflation, and therefore interest rates, but also perhaps a more nebulous sense that the US policy framework is not as solid and predictable as it might once have been."

"What appears likely is not that one currency will supplant the dollar, as the dollar abruptly replaced sterling after the second world war, but the emergence of a more complex, multipolar system. International trade is still overwhelmingly denominated by the greenback, although the use of China's renminbi is rising a phenomenon actively facilitated by Beijing."

"When it comes to foreign currency reserves, global central banks have been quietly and gradually moving towards alternatives, with the share held in dollars slipping from 71% in 2001 to 57% by the final quarter of last year."

The Trump administration's military strikes on Iran exemplify broader US foreign policy unpredictability that undermines global confidence in American institutions. This volatility, combined with inconsistent trade policies and interventions in Venezuela, contributes to declining faith in US policy frameworks. Consequently, the dollar has lost 7% of its value over the past year despite strong US economic growth. Rather than one currency replacing the dollar, a multipolar currency system is emerging. While international trade remains dollar-denominated, central banks are gradually shifting foreign currency reserves toward alternatives. China's renminbi usage is rising, facilitated by Beijing's strategic efforts. Global central bank dollar reserves have declined from 71% in 2001 to 57% by the final quarter of last year, reflecting this incremental but significant transition.

Read at www.theguardian.com