Nations aren’t just moving away from US assets. They’re ditching the dollar for gold. Fast. pic.twitter.com/zj47NphF5Y
— Taylor Kenney (@taylorkenneyitm) May 11, 2025
The global shift away from the U.S. dollar is accelerating, with banks and brokers across Asia seeing a surge in demand for currency derivatives that bypass the greenback. Trade tensions and economic uncertainty are fueling this trend, as companies and investors seek alternatives to the dollar’s dominance in international transactions.
Financial institutions are receiving more requests for hedges that exclude the dollar, favoring currencies such as the yuan, Hong Kong dollar, Emirati dirham, and euro. The demand for yuan-denominated loans is rising, and an Indonesian bank is establishing a dedicated desk for Chinese currency transactions. This marks a significant departure from the traditional reliance on the dollar as an intermediary in foreign exchange trades.
For decades, the dollar has been the default currency for global transactions, even when two non-U.S. currencies are involved. An Egyptian company looking to acquire Philippine pesos, for example, would typically convert its local currency into dollars before purchasing pesos. Now, businesses are increasingly exploring ways to skip the dollar entirely, reducing exposure to U.S. monetary policy and geopolitical risks.
The shift is not just theoretical. Stephen Jen, a leading strategist known for his “dollar smile” theory, warns that up to $2.5 trillion in dollar holdings could be sold off, potentially undermining the currency’s long-term appeal. The recent wave of dollar selling reflects growing concerns about trade policies and economic stability, prompting nations to diversify their reserves.
Gold is emerging as a preferred alternative. Countries are not only moving away from U.S. assets but are rapidly increasing gold purchases, signaling a broader strategy to reduce reliance on the dollar. Central banks in China, India, and the Gulf states have ramped up gold acquisitions, reinforcing the trend toward de-dollarization.
The implications are profound. If the dollar loses its status as the world’s primary reserve currency, the financial landscape will shift dramatically. Global trade, investment flows, and monetary policy will be reshaped, with emerging markets playing a larger role in setting financial norms.
The transition is gaining momentum, and the next few years will determine whether the dollar retains its dominance or continues to decline in influence.
SOURCES:
https://archive.is/t3DNu#selection-2425.0-2451.70
https://invezz.com/news/2025/05/09/why-asia-is-quietly-turning-its-back-on-us-dollar/