Since the war between Russia and Ukraine started last year, there have been many changes in the world, both in terms of economy, politics, and others. Some of its consequences include the opening of other superpowers and the loss of the dollar’s popularity. The Russia-Ukraine War: The End of Dollar Power
In this story, we are going to return to the reasons for these changes, the impact of the sanctions imposed on Russia, and what it means for the international economy.
A decline in the strength of the dollar
Although the dollar’s strength has been on the rise for some time, the war in Ukraine has further weakened it. Although the US economy seemed to be lagging behind in international competition, the dollar was the only thing left with a strong say in international trade.
However, the central banks of many countries are gradually kicking their currency reserves in dollars, and moving them to Chinese Yuan or other currencies of unfamiliar countries.
The cause of the collapse of the dollar
There are various reasons that contributed to the fall of the dollar, especially the economic sanctions imposed by the United States and other countries. It is a sanction given to Russia, which also affects the population of other countries other than Russia, which is about a quarter of the world’s population. It has led these countries to look for other ways of living, which includes resorting to currencies other than the dollar in order to survive.
These sanctions also opened the eyes of countries in the East of the World such as Russia and China, which are already strong economically and decided to stay away from the US currency. The Russia-Ukraine War: The End of Dollar Power
Russia’s role in weakening the dollar
Russia began to devalue the dollar around 2014 due to sanctions imposed when it annexed Crimea. When the war in Ukraine started, and more sanctions were imposed, it became more and more isolated from the dollar.
When Russia was removed from the SWIFT technology used in bank payments, it sought another way to defend itself, raising interest rates on bank loans and ordering countries to pay in rubles.
Russia has also sought alternative markets for oil products, with buyers willing to pay in rubles instead of dollars as usual.
China’s economic growth
China’s rapid economic growth is a major threat to the future of the dollar as the world’s dominant currency. After China’s entry into the markets of Middle Eastern countries, especially in the purchase of oil from Saudi Arabia, it may make many of these countries choose to use more Yuan instead of dollars.
The dollar’s hegemony was based on the fact that it was used in the oil trade around the world, the fact that the dollar would start to see a market like the Chinese Yuan, could change the way the world economy was. we are used to it.
The war between Russia and Ukraine caused many countries to start thinking about freeing themselves from the dollar and looking for other ways of life, which is accompanied by a change where the world began to see more powerful giants, able to overwhelm the United States, which was the policeman of the world.
All these changes add to the economic sanctions brought about by China’s rapid growth, which could have long-term effects on the world economy and change the global economic and financial situation.
America is in an unexpected financial crisis
As we said, the rise of the dollar came from various reasons including changes in World Politics and the rise of superpowers in the world. While many countries are looking for other currencies to use other than the dollar, it will definitely affect the technology that the United States of America had in the world.
The Decline of America’s Voice in international competition
The fact that the dollar was the most used reserve currency of the countries, gave the United States a strong say in international trade, economics, and world politics.
The fact that the United States is going to share this ability to have a special say in the world economy will make the country lose its say on some things and its fear will decrease.
The great recession in the US Economy
The use of the dollar in international trade and as a reserve currency of many countries around the world has made the dollar more valuable because more people want it. That strong value of the dollar is what has helped the US economy soar. Losing a significant portion of the dollar’s holdings, which could reduce its value in international markets, would set the US economy back.
Increase in interest on loans
Because the population wanted more dollars, it allowed the country to issue loans at lower interest rates. If the dollar does not lose value, there are few people who want to borrow, which means that those who will go to borrow in dollars will be asked for higher interest rates, so there will be fewer applicants. That will set the US economy back because there will be more borrowers, so the money the country spends on other sectors of its economy will be less.
America’s word loss
The United States has often used economic sanctions as a means of forcing foreign countries to do what they want. If the dollar were to lose value, its sanctions would no longer matter because countries would have other ways of living without the need for dollars, using other currencies. This will reduce the pressure that the United States has been using on the countries it wants to do what it wants.
The dollar will no longer have a say in the oil business
The trade known as the petrodollar, where all the oil in the world was traded in dollars, was something that had a big impact on the United States and made their currency value around the world.
As countries like China continue to expand their industrialization to the point where they buy oil and minerals with their own currency, they are putting the dollar at risk because it may lose its users, which will reduce America’s influence in the global economy.
The world is going to get more police officers
The retreat of the dollar is a major factor that is going to put the power of the world in the hands of the majority, instead of the United States of America as it used to be. While China and Russia will continue to show themselves in the international arena, it is the beginning of a new page in the politics of the powers that will lead the world in the coming days.
Obviously, the reversal of the use of the dollar will definitely have a great impact on the United States as a country that was considered a superpower in the world. It will limit its foreign influence, reduce its economy and create new superpowers with independent influence.
America’s only choice is to learn how to survive in a world of many superpowers. It will come from the search for new ways and the willingness to agree to work with other new countries that are proving to be giants so that the United States continues to be a country that has something to say in the life of the world.
