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Title : Iran, China Seek to Loosen Dollar’s Grip on Global Markets
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Iran, China Seek to Loosen Dollar’s Grip on Global Markets

A small but growing number of countries are stepping up efforts to wean themselves off the dollar, aiming to chip away at the U.S. currency’s decadeslong dominance.

Iran last week became the latest when it pledged to replace the dollar with the euro in its foreign-currency accounting.

China introduced the world’s first yuan-denominated oil contracts last month, part of a continuing effort to raise its currency’s global profile, while Venezuela launched a bitcoin-like cryptocurrency earlier this year. Russia has ramped up its gold reserves to diversify away from the dollar. Still, none of these new efforts has threatened the dollar’s global role.

Some analysts say the governments moving against the dollar may be trying to capitalize on growing unease among many nations, including U.S. allies, over recent or perceived shifts in U.S. trade policy, Washington’s approach to global alliances, and conflicting signals from the Trump administration about its preference for a strong dollar.

Increased uncertainty on those fronts could eventually fuel additional efforts to create an alternative to the dollar. For now, however, the attempts are unlikely to succeed, analysts and economists say, just as previous efforts had little or no success.

“The U.S. has been using financial sanctions very aggressively so, of course, countries like Russia and Iran will do what they can to move away from the dollar,” said Kenneth S. Rogoff, a professor at Harvard University and the former chief economist of the International Monetary Fund.

For other nations, boosting use of their currencies would require substantial changes in policy. China’s yuan, for example, is unlikely to increase its tiny share in global transactions until Beijing removes longstanding curbs on foreign investment, an effort that could take many years, analysts said.

The dollar’s dominance looks secure. Nearly 60% of all countries, accounting for 76% of the world’s gross domestic product, had exchange-rate regimes that were in some way anchored to the dollar in 2015, Mr. Rogoff’s research found. READ MORE

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