The freezing of Russia\u2019s forex holdings has accelerated de-dollarization around the world, experts say<\/p>\n\n\n\n
The process of diversifying away from the greenback by countries around the world is gathering pace, according to the latest data from the International Monetary Fund.<\/p>\n\n\n\n
The statistics tracked by the Washington-based institution show that the dollar\u2019s share of official gold and foreign currency reserves dropped to a nearly three-decade low of 58% in the fourth quarter of 2022.<\/p>\n\n\n\n
The move has reportedly been gradual and the dollar share of central banks\u2019 foreign reserves is now nearly down to a level last seen in 1995.<\/p>\n\n\n\n
The long-standing status of the dollar as the world\u2019s dominant currency has been steadily eroded in recent years amid concerns over soaring US debt and widely implemented sanctions using the currency as leverage.<\/p>\n\n\n\n
The shift was more pronounced when adjusted for exchange rates, according to Stephen Jen, CEO of Eurizon SLJ Capital Limited, as quoted by Reuters.<\/p>\n\n\n\n
\u201cWhat happened in 2022 was a very sharp plummeting in the dollar share in real terms,\u201d he said, calling the decline a reaction to the freezing of half of Russia\u2019s $640 billion in gold and FX reserves.<\/p>\n\n\n\n
According to Jen, the drastic step sparked a rethink in countries like Saudi Arabia, China, India and T\u00fcrkiye about diversifying their reserves to other currencies.<\/p>\n\n\n\n
The yuan\u2019s share of global over-the-counter forex transactions has increased from nearly zero 15 years ago to 7%, according to the Bank for International Settlements (BIS).<\/p>\n\n\n\n
After the move against Russia, other countries are questioning \u201cWhat if you fall on the wrong side of sanctions?\u201d BNY Mellon strategist Geoffrey Yu told the media.<\/p>\n\n\n\n
He said global central banks are currently seeking to diversify their assets, scooping up corporate debt, tangible assets such as real estate, and other currencies.<\/p>\n\n\n\n
\u201cThis is the process that is underway,\u201d Mark Tinker, managing director of Toscafund Hong Kong, told the agency. \u201cThe dollar is going to be used less in the global system.\u201d<\/p>\n\n\n\n