The Unbuckling of the Buck

For decades, the greenback has served as the lingua franca of global commerce. From Chilean copper shipments to German machinery sales, cross-border transactions have overwhelmingly been priced in dollars, with both parties choosing an invoicing currency that confers cost stability, liquidity, and a reassuring sense of neutrality. But as Washington turns its trade relationships into cudgels and the dollar’s aura of stability dims, businesses and suppliers beyond America’s borders are quietly breaking the habit.

The shift is more than symbolic. In markets from East Asia to Latin America, a growing number of exporters are opting to denominate contracts in euros, yuan, or even local currencies.

For firms in politically vulnerable jurisdictions, the move to diversify has been underway for years: by dodging the dollar, they hope to sidestep the long arm of American sanctions and avoid being caught in cross-border financial disputes.

Others are reacting to a more recent shift in pure economics. US interest rates have climbed, driving up hedging costs and making dollar financing more burdensome. Meanwhile, the dollar’s declines — fuelled by erratic policymaking and a lack of fiscal discipline — have cast doubt on its reliability as a store of value. The euro, yen, and Swiss franc are all benefitting from a reallocation in global investment flows, and many corporates expect their own plans to follow.

Strategic calculus also plays a role. The Biden and Trump administrations alike have made clear that the dollar is no longer just a medium of exchange—it is a weapon of influence. From tariffs to capital controls, the United States has become increasingly willing to leverage its currency for geopolitical gain. That has unnerved allies and adversaries alike, prompting a push for diversification in the financial arteries of global trade.

To be sure, dethroning the dollar is no easy task. Its network effects remain formidable, and its dominance in foreign exchange markets and debt issuance is still unrivalled. But as trust erodes and alternatives mature, a multipolar monetary world no longer seems so far-fetched. The dollar may not be dead—but its days of unchallenged supremacy in trade invoicing are numbered.