China’s central bank, the People’s Bank of China, has signed agreements with more than 40 countries to use the yuan for trade. As a result of the development, the share of the yuan as a global currency has risen from 2% in 2019 to more than 4.6% in April 2024. The development casts light on the growing de-dollarization trend.

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De-Dollarization: Why Are Countries Moving Away From The Dollar

One of the most significant reasons for many nations opting out of the dollar is Western sanctions. Sanctioned countries are among the first to use national currencies for trade. Russia and Iran, two of the most sanctioned countries, have officially ditched the US dollar.

According to Mohammad Reza Farzin, “We (BRICS members Iran and Russia) have entered into a currency agreement with Russia and fully removed the US dollar. Now we only trade in rubles and rials.”

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Both Russia and Iran are part of the BRICS bloc of countries. BRICS nations have taken a strong step to encourage local currencies for trade, further pushing the de-dollarization movement.

Will Trump Bring Back The Dollar’s Strength?

US President-elect Donald Trump will take oath as the 47th President of the United States on Monday, Jan. 20, 2025. Trump is expected to tackle the de-dollarization movement head-on.

Trump had stated that he would levy 100% tariffs on countries moving away from the dollar. He stated, “Many countries are leaving the dollar. They not going to leave the dollar with me. I’ll say, you leave the dollar, you’re not doing business with the United States because we’re going to put 100% tariff on your goods.“

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The move, however, may not work out very well for the greenback. Imposing tariffs may further push countries away from the US dollar, strengthening the de-dollarization trend.