Venezuelan President Nicolas Maduro announced on Tuesday that his country will proceed with plans to abandon the US dollar in its economic transactions. This decision reflects a growing global trend of countries seeking alternatives to the US dollar amid record inflation in the West.
Maduro told local media, “This is the path of Venezuela and the path of a free economy where currencies are not used to punish countries and impose sanctions.” His statement underscores a broader international movement towards diversifying economic dependencies away from US-based financial institutions and the dollar.
Argentina and Brazil have already pledged to develop a framework for bilateral trade using their own currencies. In early May, Argentine President Alberto Fernandez and Brazilian counterpart, Luiz Inacio Lula da Silva, made this commitment as part of the rising trend of nations opting to abandon the US dollar in trade transactions.
In April, Argentina began paying for Chinese imports in yuan instead of US dollars, a strategic move to protect the country’s diminishing foreign currency reserves. This decision closely followed a call from Brazilian President Lula da Silva for Global South countries to move away from using the USD in international trade and resort to their own currencies.
China and Brazil also forged an agreement in March to discard the US dollar in their bilateral transactions. This agreement is anticipated to reduce investment costs and foster economic ties between the two countries. Notably, the yuan overtook the US dollar in China’s cross-border trade transactions in the same month, marking a significant setback for the greenback, which is witnessing a global decline as the top reserve currency.
Earlier this year, Iraq’s central bank announced that it would allow commerce with China to be settled directly in yuan for the first time. Moreover, South African Foreign Minister Naledi Pandor stated in January that the BRICS nations, including Brazil, Russia, India, China, and South Africa, are exploring ways to bypass the dollar. This move aims to create a more equitable payment system that doesn’t disproportionately favor wealthier nations.
As countries around the world grapple with economic instability and inflation, the push away from the US dollar appears to be gaining momentum. This shift signals a potential reconfiguration of global economic power dynamics, with the Chinese yuan emerging as a significant player in international trade.
