After nearly two years in office, most would now acknowledge that Donald Trump’s time as President has been, at best, somewhat turbulent. Whether one is for or against him, one cannot deny the drama and controversy that has dogged nearly every move he’s made. Rightly or wrongly, America stands at a tipping point, and it’s evolving in ways that surpass government shutdowns and (blocked) wall constructions along the Mexico border.
However, one of the most unsettling changes in recent times is in the US currency department. In a move that has been dubbed by many as a quiet ‘dumping of the dollar’, countries all over the world are starting to abandon the dollar in droves. Of course, anyone else facing financial hardship would simply get some help to improve things, but those rules don’t apply here.
Today, we will discuss why countries are leaving the dollar behind. The reasons for them doing this are:
It’s no secret that Trump likes to enforce tit-for-tat trade skirmishes and sanctions upon countries if he believes foul play has taken place. Of course, each of these things can have a resounding impact on relations between countries and can change the trajectory of a nation’s economy. If there was a turbulent relationship between them before, it only gets worse once trade tariffs and sanctions are implemented.
The prominent countries operating under US sanctions are Russia, North Korea, China, Syria and Iran, some of which are heavy hitters in the global market place. What do all these countries have in common? Well, some might say it’s a difficult relationship with, or outright insidious hatred for, the United States. They’re united in political turmoil against the US, and when the list of enemies begins to build, consequences do follow; such as dumping US treasuries as an act of rejecting their authority.
However, it’s not just countries that the US has hard relationships with that are acting. India and Japan have followed the example of ‘dumping the dollar’ too. Of course, India has recently been working with Russia under their currency, the rubles, due to their increased military cooperation. This flew directly in the face of America’s The Countering America’s Adversaries Through Sanctions Act (Caasta), which aimed to discourage countries from trading with Russia, among others, for military gain.
The US is angry, but no one is really listening to it – rather, avoiding it. In the past few years, Trump has become an extremely controversial figure worldwide. Known first for his no nonsense attitude before he ever set foot in the oval office, he’s far from a pushover and clearly has his own agenda. His supporters admire that tenacity to be overtly patriotic, but to those overseas, it’s not always appealing.
The mantras of ‘America first’ and ‘Make America Great Again’ have been boomed far and wide by the President, and few world leaders have committed to that ideal so resolutely. There’s no shame in serving your country first, of course, but sometimes that honourable priority can, to some, be eclipsed by arrogance. The global share of USD reserves is now at its lowest point since 2013, and it’s no doubt in part due to this attitude.
In the end, countries don’t want to play ball with another nation that tells them what to do, or indeed, puts their interests at the very bottom of the pile. Of course, as the relationships break down, the dollar takes a plunge alongside.