THE steep fall in the value of the US dollar vis-a-vis most of the major currencies in recent months has reignited the debate on its future as the currency of international trade and global foreign exchange reserves.
+
The dollar now has a strong rival as a reserve currency: euro.
+
The upshot is that countries of the world are moving away from the dollar both as a medium of exchange in international trade and a reserve currency. The movement has been gradual so far and may remain so because a sudden collapse of dollar is in nobody’s interest. But the shift looks irreversible because the US is losing influence both economically — as China and India move up the scale of global growth, as euro area emerges as a powerful economic bloc and as sovereign wealth funds, notably from the Gulf, begin to impact the world of global investment — and politically.