Abstract

The paper delves into the reason for the emergence of the US Dollar as a global reserve currency. The geo-political events in the last couple of decades seem to challenge the global hegemony of the Dollar. Russia and China continue to be the strongest contenders and opposers to the Dollar’s dominance. Iran is a close third. The War in Ukraine, the fallout of the Iran Nuclear Deal all play an important role as America’s influence globally diminishes. The Dollar holds value as long as the strength of the US economy remains dominant. A decline in the economy, diminishes the luster of the Dollar. The rise of China is already seen as a threat. China has also made it clear in unequivocal terms that it wishes to replace the US Dollar with the Chinese Yuan as the global reserve currency. We already see the development of alternate payment schemes in various parts of the world. American allies do not seem to be as loyal as US would want, especially the Middle East. The paper enumerates incidents and reasons for such a challenge and the possible outcome of such events.

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