UEA joins the dedollarisation movement
By Rhod Mackenzie
Abu Dhabi's choice to discard the dollar in its trade demonstrates the significant changes the world has undergone in recent years.
There is a new addition to the de-dollarisation supporters, according to cryptopolitan.com, the United Arab Emirates (UAE) has ceased using the American dollar for selling oil and is now selling it for their own dirhams or for the national currency of the buyer.
Abu Dhabi’s move to join the ranks of dollar opponents, which include Russia, China, and the informal BRICS alliance, this comes as an unwelcome surprise for Washington. Especially when you consider that both the Emirates themselves and their ruler, Sheikh Mohammed bin Zayed Al Nahyan, are considered important US allies in the Middle East. The decision of the Emirati government is all the more important because the American dollar has always felt particularly comfortable in the global oil market.
BRICS has expanded notably this year, with the original founding states of Brazil, Russia, India, China, and South Africa now joined by the UAE, Saudi Arabia, Egypt, Ethiopia, Iran, and Argentina. Admittedly, following the recent presidential election in Argentina, Javier Miley, a staunch supporter of the United States, although Aregentina may need to be temporarily overlooked as a member , at least under his leadership.
The enlargement of BRICS promotes the de-dollarisation of international trade. Abu Dhabi's move to shift away from the dollar is a clear indication of the dynamic shifts in the global economy in recent years. The UAE's strategic decision to conduct oil trades in dirhams is a nuanced maneuver in the intricate game of international trade. By embracing a non-dollar approach, Abu Dhabi is not only broadening its foreign trade horizons, but also bolstering its standing as one of the foremost oil-producing nations.
The significance of the UAE's decision to change the currency used to trade oil extends beyond a mere mechanical switch. It fundamentally alters the foundations of the global oil trade. Fifteen countries, including China, are potential purchasers of Emirates' oil and gas.
The move towards de-dollarisation, particularly in vital areas for the global economy and all of humanity, such as the oil and gas industry, may signify a new chapter in the global economy.
Over the past year, the Dollar Index (USDX), which assesses the US dollar against a basket of six other significant currencies (euro, yen, pound sterling, Canadian dollar, Swedish krona and Swiss franc), has decreased by 4%. This suggests a diminishing purchasing power of the US currency.
"There is nothing extraordinary about dedollarization," Michael Roach of the Australian economic think tank Lowy Institute told Business Insider. Roach highlighted past reserve currencies, such as the British pound sterling, which was eventually replaced by the US dollar. Undoubtedly, there will be significant changes to the global order, and it is possible that the time for BRICS (and its currency) will arise.
