De-dollarisation refers to efforts by countries to reduce their dependence on the US dollar in international trade, finance, and foreign exchange reserves. According to reports from The Economic Times, this trend has gained renewed attention as BRICS nations and several emerging economies explore the use of local currencies and alternative payment systems for cross-border transactions. For decades, the US dollar has dominated global trade and commodity markets, with most commodities including crude oil, natural gas, gold, industrial metals, and agricultural products priced and traded in dollars. However, rising geopolitical tensions, sanctions-related concerns, and the desire of emerging economies to diversify their reserves have encouraged countries to look for alternatives. As per a JPMorgan report, the US's share in global exports and output has declined, while China's has increased, yet the dollar's transactional dominance remains evident in areas including foreign exchange volumes and trade invoicing. However, its hegemony has come into question due to geopolitical and geostrategic shifts.
Central banks have demonstrated unprecedented gold accumulation in recent years, with record purchases of 1,136 tonnes in 2022, followed by 1,051 tonnes in 2023 and 1,045 tonnes in 2024. As reported by The Economic Times, even in 2025, purchases remained strong at 863 tonnes, far above the long-term annual average of 473 tonnes recorded between 2010 and 2021. According to the World Gold Council, this sustained buying has become a major support factor for gold prices and could continue if reserve diversification accelerates. The increased central bank demand represents a clear beneficiary of the de-dollarisation trend. According to data compiled by the World Gold Council for the first half of 2026, the largest sovereign buyers of gold by country through official central bank net purchases are led by Poland, Uzbekistan, and China.
Using local currencies can reduce transaction and hedging costs, making international trade more efficient, while greater financial sovereignty represents another important benefit. Countries heavily dependent on the dollar-based financial system may be vulnerable to sanctions or policy decisions taken outside their control. Central banks are increasingly diversifying their reserves by holding more gold and other currencies, helping reduce concentration risk. However, moving away from a common settlement currency could increase market fragmentation and create greater currency-related volatility, with pricing and settlement across multiple currencies adding complexity to global trade. The International Monetary Fund (IMF) reports that the US dollar's share of global foreign exchange reserves has fallen to around 56%, marking a multi-decade low from 64% in 2015. The dollar share of foreign ownership in the US Treasury market has fallen over the last 15 years, pointing to reduced reliance on the dollar.
While the dollar is unlikely to be replaced overnight, a gradual decline in its dominance is possible as more countries adopt local-currency trade arrangements and diversify their reserves. According to the Bank for International Settlements' April 2025 survey, the dollar was on one side of 89.2% of all foreign exchange transactions, which was higher than in 2022. Foreign exchange markets therefore remain deeply dollar-centric even while central banks diversify their reserves. The Federal Reserve has noted that the dollar is overwhelmingly important in trade invoicing outside Europe, where the euro is more prominent. Global Defense News reports that China's renminbi faces structural constraints due to capital-account restrictions and regulatory uncertainty that limit global investors' willingness to hold large positions. The euro is in a stronger institutional position because it is already freely traded and supported by large, sophisticated financial markets, with the European Central Bank's 2025 assessment placing the euro at around one-fifth of global official foreign exchange reserves at constant exchange rates.
While the dollar is unlikely to be replaced overnight, a gradual decline in its dominance is possible as more countries adopt local-currency trade arrangements and diversify their reserves. As reported by The Economic Times, if de-dollarisation gains momentum, gold demand could remain strong and the influence of US monetary policy on global commodity markets may gradually diminish. The United States is unlikely to favour any move that weakens the dollar's global role, but it cannot prevent sovereign nations from choosing alternative settlement methods. Increased use of multiple currencies could lead to higher volatility in international trade, while gold stands out as a clear beneficiary due to rising central bank demand. The gross national debt of the United States has officially surpassed $40 trillion for the first time, climbing steadily due to structural budget deficits, with roughly 80% owned by domestic and foreign investors.
