De-Dollarization Pt. 1

20 Jan

We always thought that the decline in the dollar would come as a result of flows, of a fundamental growing realization that the Ponzi scheme that is being orchestrated by The Fed  on global creditors has come to an end. However, it would seem the old specter of geo-politics and sanctions may have usurped fundamentals as the driving force behind a growing de-dollarization.  ING Bank states that” 62% of Russia’s goods and services exports to have been settled in dollars in 2019, down from 80% in 2013. Its trade with China was almost all in dollars in 2013; now less than half is. Trade with India, much of it in the sanctions-sensitive defence sector, shifted from almost all dollars to almost all roubles over that period. One reason for this shift, say Russian officials, is that it speeds trade up, since dollar payments can be delayed for weeks as financial intermediaries run sanctions checks.”  We used to think that everyone wanted to hold dollars because it facilitated trade and commerce, however given our USA-centric attitude perhaps this shift is becoming more pronounced than one might think.

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