3 Sectors Most Exposed to De-Dollarization: Do You Hold Them?

The phenomenon of de-dollarization is as real as it gets. The event is not merely restricted to just textbooks now; it has evolved into a narrative that is gaining immense traction in today’s world and age. De-dollarization in today’s global regime can be summarized into a series of brief events. For example, nations ditching the US dollar for trade, a hunt for alternative currencies, and the rise of alternative assets such as gold. These developments spell trouble for the dollar in bold headlines, fanning the flames of de-dollarization to new levels. That being said, this narrative is especially lethal to three financial domains. Let’s check how the event can harm these sectors in the future to safeguard one’s invested stake in the domains.

Also Read: Strong US Dollar Is Dangerous: De-Dollarization Accelerates Worldwide

Also Read: Strong US Dollar Is Dangerous: De-Dollarization Accelerates Worldwide

Three Sectors Exposed to De-Dollarization The Most

1. Energy Trade

Source: Mining.comGlobal nations have long used the US dollar in conducting energy trade. The dollar has been a primary currency for exchange in this domain. But now the winds of change have started to pivot towards the Chinese Yuan, a USD currency competitor that is now scooping all the attention as of late. Yuan is now being used to do a plethora of energy trades with nations. Apart from Yuan and Ruble, countries like Iran and Venezuela have been conducting energy trade in Euros and other currencies to reduce their reliance on USD. This development can lead to a short-term demand for the USD, bringing it closer to its ruin.

2. Global Reserves Share

Gold bars and US dollars – Source: cmcmarkets.comGold bars and US dollars – Source: cmcmarkets.comGlobal reserves around the world have started to stockpile gold. The precious metal has defeated the euro to become the second-largest asset held by reserves.

The USD, on the other hand, has dropped to mirror its 1990s valuation, causing chaos among the masses. While investors don’t seek active participation in global reserves, they do have passive stakes through US treasuries, foreign currency ETFs, gold, and sovereign wealth funds. De-dollarization in this sector can impact these four subsectors, reducing their dependence on the dollar for the long haul.

3. Forex

Source: Bloomberg / Christian Blaza IllustrationSource: Bloomberg / Christian Blaza IllustrationThe plunging US dollar value makes it unattractive as a forex asset. Forex investors who invest in Forex trading may encounter losses as the USD fails to impress the world as of late. Trump’s relentless tariff policies, coupled with the rate cut possibility, make dollar-backed assets dull in the long run. This development also forces de-dollarization elements to come alive, reducing the demand for dollar-backed goods as a result.

Also Read: 70+ Nations Use These 3 Ways To Abandon USD, Spurring De-Dollarization

Also Read: 70+ Nations Use These 3 Ways To Abandon USD, Spurring De-Dollarization