KATHMANDU: The US dollar has been an integral part of the global economy. For decades now, the currency has dominated the world stage, especially the oil markets. Given its reserve currency status, it has indeed created massive demand for itself and international demand constitutes a huge part of the dollar’s valuation. The global currency role not only added a substantial edge to the dollar, it also created an almost immeasurable demand for US treasuries as countries wanted to maintain stores of petrodollar.The dominance of
the USD gave the US glorified influence and power on the global stage. The preconceived notions of the USD are slowly fading out as
the world’s emerging economies are slowly but surely stepping onto the global trade platform. The countries once
loyal to the greenback are now thinking of ways to reduce the American influence. In the past few years, China and other emerging nations such as Russia have been making agreements to move away from the greenback in global trade. Adding to the woes are several major oil-producing nations initiating selling of oil in other currencies coupled with the fact that the United Nations and International Monetary Fund have issued reports arguing for the need to create a new global reserve currency independent of the dollar.
The unbeatable nature of the USD is not nearly as solid as most Americans believe it to be. The world’s response to the US sanctions against Iran is a perfect example demonstrating trends in the global financial market.The irony is that the US fashioned its Iranian sanctions assuming
that oil trades occur in USD. That reflection — an echo of the more general assumptions that the USD will continue to exert major influence in international markets — has given countries reason to shy away from the USD, fuelling speculation that the powerful US economy is losing its grip over the global market. This slow yet steady trend, it is assumed, will eat away American power until the greenback makes a resounding comeback, further hinting that the birth of new world economic order is not such a distant horizon! (The author is the
senior assistant manager of business development department at Mercantile Exchange Nepal. She can be contacted through