Russian President Vladimir Putin claims Biden administration is ‘killing’ the US dollar by using it as a weapon – and says a ‘blow has been dealt’ to America and even its allies are now ‘downsizing’ the dollar
Russian President Vladimir Putin once again took aim at the US dollar, accusing President Joe Biden’s administration of “killing it with its own hands” after using the currency as a foreign policy weapon.
In a new and highly divisive interview with Tucker Carlson, the Russian president said: “The dollar is the cornerstone of the power of the United States… It is the main weapon that the United States uses to maintain its power around the world.
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“Once the political leadership decided to use the dollar as an instrument of political struggle, this American power received a heavy blow.”
To explain this alleged decline in the dollar’s dominance, Putin – whose comments were translated live from Russian to English – noted that “even US allies are reducing their dollar reserves.”
Is this trend away from the US currency – known as de-dollarisation – really as bad as the Russian president makes it out to be?
Was the writing on the wall?
De-dollarization occurs when countries move away from the dollar as a reserve currency, medium of exchange, or unit of account. The United States has repeatedly rejected any notion that this is a problem – instead viewing it as a “problem.”The natural desire (of countries) to diversify“Their economies.
But Putin implied that Russia’s hand had been forced to intensify its plans to ditch the dollar after its invasion of Ukraine in 2022, which sparked a backlash of severe sanctions by the United States and other Western powers. Russia was also expelled from the world’s main international payments network, SWIFT.
“Look what’s happening in the world” Putin told Carlson. “Until 2022, almost 80% of foreign transactions in Russia were settled in US dollars or euros. Currently, the proportion has decreased to 13%… By the way, our transactions in yuan amounted to about 3%. Today, 34% of our transactions are in rubles, And just over 34% in yuan.
While Putin blamed sanctions in this latest interview, many would argue that the writing has long been on the wall regarding Russia’s retreat from dependence on the dollar.
Russia is Founding member of the BRICS group, a group of emerging market economies – including China, India, Brazil, South Africa and many others – who try to settle major trades in their local currencies rather than the US dollar. This movement is gaining momentum as countries attempt to lower transaction costs, reduce their exposure to global volatility and geopolitical risks, and strengthen their domestic economies.
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What does the dollar depreciation data say?
The Russian President’s warning about the US currency comes at a good time. This comes amid growing speculation about the dollar’s status as the world’s reserve currency, largely due to the country’s historical value. $34 trillion debt mountain.
according to Data from the International Monetary FundThe dollar’s share of allocated global foreign exchange reserves has declined by about 6% since early 2016.
However, the US dollar still represented 59.17% of allocated global foreign exchange reserves in Q3 2023 (latest data set) – a stark contrast to the Chinese yuan’s reserves of 2.37% in the same period.
Analysts in Intelligence FXC“Our research shows that de-dollarization is happening, but it is by no means fast,” said he, who recently published a report on de-dollarization.
“Instead, it is currently on track to be a slow process over the next two decades as countries shift to a wider range of currencies, likely to provide a greater hedge against potential future geopolitical shocks.”
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(Tags for translation)Vladimir Putin