Does dedollarisation spell a revolution in emerging markets?

The US dollar’s share of global currency reserves has fallen from 75% to 58% since 1999. Could calls for a US dollar alternative in developing economies replace 92 years of dominance with a multi-polar monetary system?

Jamie Gordon

Dedollarisation dollar sinking

Little over a century after the ink dried on the first US dollar printed by the Federal Reserve, its weaponisation as a tool for financial warfare and the expected reversal of the fastest interest rate hikes in four decades have raised the question of whether the greenback can maintain its dominance, an issue of potentially seismic importance for assets tracked by ETFs.

The mood music surrounding the dollar has soured in recent weeks following a 10% drop in its value versus a basket of other currencies since its peak last November, prompting hedge fund investor Stanley Druckenmiller – infamous for shorting sterling alongside George Soros in 1992 – to declare a US dollar short position his only high-conviction trade...

This article first appeared in ETF Insider, ETF Stream's monthly ETF magazine for professional investors in Europe. To read the full article, click here.


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