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06/16 17:44

Dedollarization intensifies: Asia turns its back o

Dedollarization intensifies: Asia turns its back on the US dollar

Across Asia, the US dollar is rapidly losing ground as countries step up efforts to reduce their dependence on the US currency.

With the dollar down over 9% against a basket of major currencies, the potent combination of coordination among BRICS countries, local currency initiatives, and rising hedging costs is accelerating the region’s shift to alternative monetary strategies.

This is not a sudden change, but the culmination of a trend that has been developing for more than a decade. According to Bloomberg analyst Steven Chu, the first steps were taken in 2014, following geopolitical tensions between Russia and the West. This period marked the beginning of the withdrawal of Russian government securities from the United States, a move later followed by China and other economies that fear financial ties to the United States.

What started as a slow drift is now turning into a systemic shift. The dollar’s share of global foreign exchange reserves is declining, and recent market behavior reflects a growing loss of confidence. Chu noted that markets are already showing fatigue from U.S.-focused trade tensions and unpredictable tariff policy. The result? Rare, synchronized withdrawals from U.S. assets, including dollars, bonds and stocks.

One of the clearest signals of this shift came from Taiwan. In a surprising move, the Taiwan dollar jumped more than 10% in just two days—a surge that was not driven by retail traders but by institutional changes. Taiwanese life insurance companies, which collectively manage more than $700 billion in foreign investments, have begun to divest themselves of dollar-denominated assets as hedging costs soar. With some hedging rates reaching double digits, holding U.S. dollar-denominated assets is no longer economically viable for many large players.

“ This is a structural change ,” Chu explained, emphasizing that the region is no longer struggling with the burden of dollar debt, as it has in the past, but with the risks of holding too many dollar assets. This shift marks a profound transformation in the way Asian financial systems treat the world’s reserve currency.

As BRICS countries continue to develop frameworks for settling trade in their own currencies and local economies gain confidence in their monetary independence, the dedollarization movement in Asia appears to be entering a new phase in which the dollar is no longer seen as the only safe haven.

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