Last Update: April 17, 2023, 4:01 PM IST
Washington, United States
US Treasury Secretary Janet Yellen speaks to the press at the US Treasury Department in Washington, US.
The US dollar is on the verge of losing its luster in the global market as Russia has been vocal in using trade in the local currency for the overall process of ‘de-dollarization’.
US Treasury Secretary Janet Yellen has said that economic sanctions imposed by the United States against Russia and other countries threaten the dominance of the dollar as the targeted nations seek an alternative.
“When we use financial sanctions attached to the role of the dollar, there is a risk that over time it could undermine the hegemony of the dollar,” Yellen said in an interview on CNN.
“Of course, this creates a desire to find an alternative to China, Russia, Iran,” she said.
“But the dollar is used as a global currency because it is not easy for other countries to find a substitute with similar properties,” she said.
His statement comes at a time when the US Treasury and State Departments approved nearly 120 targets, including Chinese, UAE and Turkish firms, for squeezing Russia over its ongoing war with Ukraine.
However, Yellen said that sanctions are an “extremely important tool”, especially when used by the United States and its allies as a “coalition of partners working together to enforce these sanctions”.
The US has led the West in imposing sanctions against Russia after the Kremlin launched a “special military operation” against Ukraine on February 24, 2022.
Sanctions have led to a commodity crisis and trading in local currencies is being seen as a viable solution to avoid sanctions without affecting supply chains and global trade flows.
The US dollar is on the verge of losing its luster in the global market as Russia has been vocal in using trade in the local currency for the overall process of “de-dollarization”.
Meanwhile, China is actively trying to introduce the yuan as an alternative to the dollar. China’s yuan has surpassed the US dollar as the most traded currency in Russia as Moscow continues to deepen its political and economic ties with Beijing.
Iran has also completely abandoned US dollar trade with China and Russia. Saudi Arabia also said that it would completely abandon the petrodollar and start accepting the Petroyuan.
India has also been supporting the idea of trading in local currency to promote exports. In March, the Indian government said that 18 countries, including Russia, Sri Lanka, the UK, have expressed interest in settling foreign trade with India in Indian rupees.
However, some experts say that the US dollar will not lose its dominance against other currencies. According to the Carson Group, the role of the US dollar in the global economy is in no danger of ending.
The company said that the size of the US economy and the strength of the US economy enable confidence in the US and therefore in the US dollar. It states that the dollar is the most popular medium in the world in terms of trade and is more powerful than North and South America.
(with inputs from agencies)
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