Will Putin Fight The Dominance Of The United States Dollar?

As President Putin assumes another presidential term, political observers are debating his strategic priorities. While the war against Ukraine is a paramount concern for the security of Russia, a few of Putin’s statements are being scrutinized to see whether he would try to turn his promises into realities or not. Foremost among them is his pledge to fight the dominance of the United States dollar in the world economy. He described an “irreversible” trend for the decline of the U.S. dollar in global markets. What kind of policies will the Russian President implement to weaken the American dollar in the world economy?

Putin attempted to gather support for his statements, and he mentioned his desire to weaken the United States’ legal currency during the meeting of the BRICS nations in South Africa in August 2023. (He addressed BRICS leaders through a video conference.) However, that summit did not declare any official policy or a specific plan to make nations less dependent on the U.S. dollar. According to Newsweek,
“The U.S. Dollar was used in 48% of international payment transactions last year, the highest level over a decade. But the euro makes 23.2 percent of transactions, and the Chinese yuan is way behind at 3.47 percent.”

Putin has many options to promote the de-dollarization of international trade. He can replace the dollars in the commerce among the nations that comprise BRICS. That group’s members include giant nations such as China, India, Brazil, and South Africa. However, there must be a measurement of the decline the dollar is experiencing among these four countries. In addition, Putin can encourage countries that strive to ditch the U.S. dollar in their trade. Egypt is an example, as it decided last year to replace the dollar with its currency in its external trade. However, such a plan has to be backed up by Russia. Otherwise, Egypt’s plan to use other currencies than the American dollar will fail.

Perhaps Putin may give more power to the Russian ruble, especially in Moscow’s trade with developing countries in Africa, the Middle East, and Latin America. Economists should analyze this phenomenon of a potential ascendancy of Russia’s official currency in the monetary systems and the markets. And for sure, other currencies will have a more significant role in the future global financial markets, especially the Euro.

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