For as long as the US dollar has held the dominant position in international commerce, there have been attempts to dethrone it.

The dollar has found itself in a seemingly never-ending battle to maintain its primacy from challengers such as the Euro, Bitcoin and various cycles of advocacy for the gold standard. The conflict has particularly piqued right now, as Russia boosts its yuan holdings, El Salvador accepts Bitcoin as legal tender, and ministers from the so-called BRICS countries (Brazil, Russia, India, China, South Africa, Egypt, Ethiopia, Iran and United Arab Emirates) collaborate on a dollar alternative.

To assess how the dollar is holding up to these stress tests, and what is at stake in the currency retaining its dominance, Double Take recently welcomed Saleha Mohsin, senior Washington correspondent for Bloomberg News. Mohsin’s new book, ‘Paper Soldiers: How the Weaponization of the Dollar Changed the World Order’ charts the myriad tests the dollar has faced over the decades.

In Mohsin’s view, the challenge to the dollar “feels the strongest” in the current moment, but external forces are less to blame for recent self-imposed wounds.

I think the only thing that could hurt the dollar status for America is what we do to ourselves … What can hurt us is deep partisanship, an inability to manage our public finances in a responsible and calm manner, not just getting to the midnight deadline and we avoided breaching the debt ceiling, but how we get to that. Let’s not get to the midnight deadline. Let’s not have that rhetoric and vitriol out there. Let’s not even make raising the debt ceiling or avoiding a federal shutdown a topic of conversation.

Saleha Mohsin, senior Washington correspondent, Bloomberg News

According to Mohsin, if the world’s ability to do business without touching the dollar grows, it may make the country’s economic sanctions against adversaries less potent, which could weaken US economic, geopolitical and diplomatic strength.

That said, Mohsin believes it is too early to gauge the long-term ramifications of players in pulp and oil markets experimenting with paying in, for example, Indian rupees.

I do not know if there has been enough movement and almost distance from what has happened to see all of the data. What I can say is that there has been a lot of talk of ‘let’s move away from the dollar,’ and Russia says, ‘we are going to trade oil with India and just use rupees,’ and then they realize that they cannot do a lot with these rupees. They can spend dollars in more places than the Indian rupee. And so, the talk is stronger than the reality so far, particularly from governments.

Saleha Mohsin

From Mohsin’s perspective, while countries may experiment with trading without the dollar among themselves, during periods of high volatility, people should continue to flock to the dollar and the Federal Reserve for transactions such as currency swap agreements.

She cited a recent US Congressional Budget Office report on the dollar’s dominance as a guide to precedent.

They go into the last couple of reserve assets and what caused the demise. And usually for the last two, for Britain and for the Dutch florin, it was a lack of trust and an economic event happened. So, it would take that for the US to wane. But also in the past, it has always been a government, in a country. I think that is going to continue. I do not know if people will just turn to Bitcoin.

Saleha Mohsin

To hear more, subscribe to “Double Take” on your podcast app of choice or view The Almighty Dollar episode page to listen in your browser.


Raphael J. Lewis

Raphael J. Lewis

Head of specialist research

Jack Encarnacao

Jack Encarnacao

Research analyst, investigative, Specialist Research team

PAST PERFORMANCE IS NOT NECESSARILY INDICATIVE OF FUTURE RESULTS. Any reference to a specific security, country or sector should not be construed as a recommendation to buy or sell this security, country or sector. Please note that strategy holdings and positioning are subject to change without notice. MAR006242, Exp 06/29 For additional Important Information, click on the link below.

Important information

For Institutional Clients Only. Issued by Newton Investment Management North America LLC ("NIMNA" or the "Firm"). NIMNA is a registered investment adviser with the US Securities and Exchange Commission ("SEC") and subsidiary of The Bank of New York Mellon Corporation ("BNY Mellon"). The Firm was established in 2021, comprised of equity and multi-asset teams from an affiliate, Mellon Investments Corporation. The Firm is part of the group of affiliated companies that individually or collectively provide investment advisory services under the brand "Newton" or "Newton Investment Management". Newton currently includes NIMNA and Newton Investment Management Ltd ("NIM") and Newton Investment Management Japan Limited ("NIMJ").

Material in this publication is for general information only. The opinions expressed in this document are those of Newton and should not be construed as investment advice or recommendations for any purchase or sale of any specific security or commodity. Certain information contained herein is based on outside sources believed to be reliable, but its accuracy is not guaranteed.

Statements are current as of the date of the material only. Any forward-looking statements speak only as of the date they are made, and are subject to numerous assumptions, risks, and uncertainties, which change over time. Actual results could differ materially from those anticipated in forward-looking statements. No investment strategy or risk management technique can guarantee returns or eliminate risk in any market environment and past performance is no indication of future performance.

Information about the indices shown here is provided to allow for comparison of the performance of the strategy to that of certain well-known and widely recognized indices. There is no representation that such index is an appropriate benchmark for such comparison.

This material (or any portion thereof) may not be copied or distributed without Newton’s prior written approval.

In Canada, NIMNA is availing itself of the International Adviser Exemption (IAE) in the following Provinces: Alberta, British Columbia, Manitoba and Ontario and the foreign commodity trading advisor exemption in Ontario. The IAE is in compliance with National Instrument 31-103, Registration Requirements, Exemptions and Ongoing Registrant Obligations.

Explore topics