Where in the world is moving away from the US dollar for trade settlements?
June 14, 2026|⏱️~10 minutes
By Clara Whitfield
The debate about "de-dollarization" has become common in financial media. One popular story says many countries are joining forces to replace the US dollar with the yuan, the ruble, the rupee, or even gold. Another view insists the dollar is unshakable and all this talk is just noise.
The reality is somewhere in between – and more interesting than either extreme.
According to the IMF’s COFER data for the fourth quarter of 2025, the dollar’s share of global foreign exchange reserves was about 56.8% – the lowest in decades. Back in 2000, that share was around 71%.
At the same time, in several parts of the world, non traditional reserve currencies – not just the Chinese yuan but also the euro, the Indian rupee, the UAE dirham, and even central bank digital currencies – are being used more often in trade settlements.
1. A few key ideas first
What is a “non-traditional reserve currency”?
Traditionally, the IMF defines “reserve currencies” as the US dollar, euro, Japanese yen, British pound, and Swiss franc – currencies that central banks hold in large amounts to handle balance of payments crises.
Non-traditional reserve currencies are all other currencies, as well as some that are held by a few central banks but not yet mainstream (for example, the yuan, Australian dollar, Canadian dollar, and South Korean won).
What is “local currency settlement”?
It simply means two countries trade using their own currencies directly, without converting everything into US dollars first. For example, if Brazil sells soybeans, it receives Brazilian reais, and the buyer pays in its own currency – no dollar needed in between.
Why does this matter?
The currency you use for trade affects exchange rate risk, financing costs, and a country’s ability to handle financial shocks. When a country settles more trade in its own currency, it becomes less dependent on dollar liquidity.
2. The dollar’s reserve status: facts, trends, and opinions
IMF COFER data for Q4 2025 shows the dollar’s share of allocated foreign exchange reserves at about 56.8%. The euro is second with about 20.2%, followed by the yen (around 5.8%) and the pound (about 4.7%). The yuan’s share is roughly 2%, ranking fifth or sixth. The dollar’s share has been slowly falling since around 71% in the early 2000s.
But the shift becomes clearer when you look at asset types. In April 2026, global central banks’ gold reserves, by value, exceeded their inflation adjusted dollar denominated reserves for the first time since the IMF began publishing this data in the late 1990s. This suggests “de dollarization” is not just about holding different currencies – it is also about moving from dollar bonds to physical gold.
Experts disagree on how much of the dollar’s falling share is active “de dollarization” versus technical factors (like exchange rate changes that affect the converted value of reserves). A cautious view is this: the dollar is still dominant, but its monopoly is eroding. More importantly, central banks and companies are changing their mindset. They no longer assume “the only way is the dollar.” They are starting to actively look at alternatives.
3. Which regions are actually using more non traditional currencies?
The examples below come from public central bank announcements, trade statistics, or industry reports. We separate confirmed facts from emerging trends.
3.1 Russia and Eurasia: an extreme case of sanctions
According to a public statement by Russia’s finance minister in November 2025, the share of local currency settlement in Russia China trade reached 99.1%. Russia has also significantly reduced dollar use in trade with India, the UAE, Turkey, and others. In April 2026, Russia announced it would stop using dollars for its oil and gas exports to Europe.
Russia’s case is very special – it was forced into local currency settlement by severe financial sanctions. It is not a model that most countries can copy. But it did set a precedent: a major commodity exporter can completely bypass the dollar system when trading with advanced economies. Whether this spreads to others depends a lot on how geopolitical conflicts evolve.
3.2 The Middle East: small cracks in the petrodollar
In June 2024, the 50 year petrodollar agreement between the US and Saudi Arabia expired and was not renewed. Since then, Saudi Arabia has accepted multiple currencies for its oil exports.
By the end of March 2026, according to energy trade data, the yuan’s share of Middle East crude oil sales to China reached 41%, while the dollar’s share fell to 52%. The yuan passed the euro to become the second largest settlement currency for Middle East China oil trade, behind only the dollar. Looking at specific countries: Saudi Aramco used the yuan for 45% of its crude oil sales to China. For Russia China oil trade, the yuan’s share was over 90%. Iran switched to 100% yuan for its crude exports to China starting in January 2026. Iraq’s yuan share for oil sales to China exceeded 60% in March 2026.
The motivation for Gulf oil exporters is less about “abandoning the dollar” and more about “risk diversification.” They do not want all their export revenues tied to a single currency, especially with rising US fiscal deficits and growing geopolitical uncertainty. At the same time, accepting yuan helps attract Chinese investment and technology. For now, this is still an early trend, and it is unlikely to fundamentally change the dollar’s dominance in Middle East oil trade any time soon.
3.3 Southeast Asia: payment convenience drives change
Southeast Asia is a key region for cross border yuan use. A 2025 industry report showed that yuan receipts and payments between China and ASEAN reached 8.9 trillion yuan in 2024, accounting for 13.8% of total cross border yuan settlement – much higher than in the Middle East, Africa, or Latin America. By the end of 2025, the total size of bilateral local currency swap agreements between China and ASEAN countries was the largest of any region.
What is interesting in Southeast Asia is the focus on payment system connectivity. China, Vietnam, Malaysia, and Cambodia have set up cross border QR code payment links. Consumers and small merchants can now scan a code and pay directly in their own currency at real time exchange rates.
The lesson from Southeast Asia is that non traditional currency use does not have to be about “challenging the dollar.” The main driver is making cross border payments cheaper and easier through technology. That kind of approach may do more to spread local currency settlement than any grand political declaration.
3.4 Africa: a practical response to dollar shortages
Africa is seeing a series of scattered but noticeable policy changes.
Nigeria: In late May 2026, the central bank announced that all funds remitted into the country must be converted into naira. The dollar receipt channel was effectively closed for legal transactions. The reason is simple: Nigeria has long struggled with dollar shortages, and forcing naira settlement helps ease the pressure.
South Africa: Standard Bank became the first African bank to connect to CIPS, China’s cross border payment system.
Kenya: It converted about $5 billion of Chinese loans from dollar denominated to yuan denominated.
Zambia: It became the first African country to accept yuan for mining taxes and royalty payments.
For many African countries, dollar scarcity is a chronic reality. When dollar liquidity is tight, governments and businesses are naturally willing to accept other currencies that they can use to pay for imports – especially from China. This is less a strategic choice and more a pragmatic response to risk.
3.5 Latin America: swap lines and commodity trade
In 2025, China and Brazil renewed a bilateral local currency swap agreement worth about 190 billion yuan (or 157 billion reais), valid for five years. Brazil’s central bank holds a sizeable amount of yuan reserves – at one point over 5% of its total reserves. Brazil, Argentina, and others have also used local currency for some commodity trades (soybeans, iron ore, beef).
For emerging markets facing dollar liquidity pressure, a bilateral swap line acts like an emergency credit line. When they run into balance of payments trouble, they can use their own currency to get the other country’s currency from the central bank. During the dollar tightening cycle of 2023–2025, many emerging markets saw such swap lines as an important safety net.
4. It’s not just the yuan – other currencies are growing too
The yuan gets most of the media attention, but it is not the only non traditional reserve currency gaining ground. Industry reports show:
Indian rupee: India has signed local currency settlement agreements with over 20 countries, including Russia, the UAE, and Saudi Arabia. The rupee’s share of global trade settlement is about 3% – small but growing.
UAE dirham: Through the mBridge project (a multi central bank digital currency bridge), the dirham can now be settled directly and instantly with the yuan, the Thai baht, and others.
Euro: Its share is around 18% and has not grown much, but it remains the main alternative to the dollar for trade between the EU and its neighbors (Turkey, the Western Balkans, etc.).
Australian dollar, Canadian dollar, South Korean won: Their shares have increased modestly in trade with Asian partners.
Takeaway: global trade settlement is becoming more fragmented. Different regions pick different non dollar currencies based on their main trade partners, geopolitical ties, and payment infrastructure. A single currency replacing the dollar is unlikely. Instead, we are likely to see a multipolar system with several currencies coexisting.
5. Infrastructure is quietly changing the rules
It is not just about currencies – the payment and clearing systems behind them matter just as much.
What exists today
The world’s dominant cross border payment system is SWIFT. But SWIFT is essentially a messaging system, not a fund transfer system. In recent years, several alternatives or supplements have appeared:
CIPS (Cross border Interbank Payment System) : As of March 2026, it had 194 direct participants and 1,597 indirect participants, covering 126 countries and regions. It can reach over 5,100 banks across 191 countries and regions. On April 2, 2026, CIPS processed a record 1.22 trillion yuan in a single day.
SPFS: Russia’s financial messaging system, used mainly with a few trading partners.
INSTEX: A EU created vehicle for trade with Iran, but its use has been very limited.
mBridge (multi CBDC bridge) : Launched in 2021 by the BIS Innovation Hub Hong Kong Centre together with the central banks of China, Hong Kong, Thailand, and the UAE. Saudi Arabia joined later. It can settle cross border payments in 6–9 seconds with over 50% lower costs. It is now in its MVP (minimum viable product) stage and can handle real commercial transactions.
BRICS Pay: A cross border payment framework under discussion among BRICS countries – still in the design phase.
Why this matters
These new systems lower the technical barriers to bypassing SWIFT and the dollar. In the past, if a country wanted to avoid the dollar in trade, it had to build its own complex clearing system. Now there are several ready made or emerging options. That does not mean SWIFT will be replaced any time soon. But these systems do provide extra channels, making local currency settlement more feasible.
6. Ray Dalio’s view: three irreversible changes
Ray Dalio, founder of Bridgewater Associates, argues in Principles for Dealing with the Changing World Order and in his 2025–2026 analyses that the global monetary system is undergoing three irreversible structural changes. These are his personal views, but they have influence among institutional investors.
First, the erosion of the dollar’s reserve status has moved from “talk” to “fact.”
Dalio believes the key turning point was the US freezing about $300 billion of Russian central bank assets in 2022. From that moment, any country with tense geopolitical relations with the US had to ask: are my dollar assets really safe? That doubt has driven gradual diversification of central bank reserves – and the direction is clear, even if the pace is slow.
Second, commodities are being “monetized.”
Dalio’s argument: when faith in fiat currencies is diluted – especially when major economies run persistent fiscal deficits and monetary easing – people look for things that cannot be printed out of thin air: gold, copper, oil, critical minerals. This helps explain why gold prices stayed strong and even broke records in early 2026, despite the Fed keeping interest rates relatively high, breaking the old inverse correlation with the dollar. It also explains why oil producers are willing to accept yuan or other currencies: they can directly buy real goods with those currencies, without converting to dollars first.
Third, the emerging market debt cycle has turned a corner.
According to Dalio’s debt cycle theory, the dollar tightening cycle of 2022–2025 caused capital outflows and currency depreciation in emerging markets. That process has already cleared most of the risk. From 2026 onward, some emerging markets with solid fundamentals (India, Saudi Arabia, Indonesia, Brazil) may enter a new upswing. Their growth, demographics, and resource endowments put them in a relatively favorable position in the coming multipolar monetary world.
A note of caution: these are opinions, not proven facts. Forecasting macroeconomic turning points is notoriously hard. Still, Dalio’s framework offers a useful reminder: we should not project the linear trends of the past few decades too far into the future.
Conclusion: a slow fragmentation, not a revolution
Here are a few careful conclusions:
The dollar’s dominance will not collapse anytime soon, but its monopoly is eroding. This is a structural change – it is unlikely to reverse simply because the Fed cuts rates again.
Non traditional reserve currencies are being used more in several regions, but the picture is uneven. Russia (sanctions), the Middle East (risk diversification), Southeast Asia (payment convenience), Africa (dollar shortages), and Latin America (commodity trade) are all driven by different forces. There is no single “de dollarization movement” – just many local, practical adjustments.
The real long term variable is payment infrastructure and digital currencies. If mBridge, BRICS Pay, or private stablecoin networks manage to offer safe, cheap, fast, and large scale cross border settlement in the coming years, businesses will have much more freedom to choose their settlement currencies. At that point, “which currency to use” will depend more on convenience and cost than on historical habit.
For companies and investors, the most practical approach is not to bet on “dollar collapse” or “yuan rise,” but to recognize that currency volatility and uncertainty are increasing. That means thinking about diversifying currency risk – and perhaps adding moderate exposure to gold, commodities, and fundamentally sound emerging markets. None of this is specific investment advice; every reader must make their own decisions.
When the US dollar broke away from gold in 1971, few people foresaw the high inflation and currency turmoil of the next 20 years. Today, we may be at a similar, slowly unfolding paradigm shift. Understanding it is not about predicting tomorrow. It is about preparing for a financial environment that will look quite different from what we have been used to.
Disclaimer: This article reflects the author’s personal views and does not constitute investment advice. The data and information cited come from public sources; the author assumes no responsibility for their accuracy or completeness. Financial markets are highly uncertain, and readers should make their own judgments.
About the Author
Clara Whitfield is a writer and data analyst specializing in global economics. Her approach is to connect macroeconomic data with the daily lives of ordinary people, using concrete stories to explain abstract trends. She has worked at international development agencies and financial media, covering topics such as trade, consumer behavior, and the labor market. She believes that a cup of coffee, an old piece of clothing, or a pair of sports shoes can all serve as an entry point to understanding the world economy.
References:
[1] International Monetary Fund. COFER (Currency Composition of Official Foreign Exchange Reserves), Q4 2025 data.
[2] People’s Bank of China / Cross-border Interbank Payment System (CIPS). Official participant statistics, March 2026.
[3] Bank for International Settlements (BIS) Innovation Hub. mBridge (Multi-CBDC Bridge) project documentation, 2026.
[4] Dalio, Ray. Principles for Dealing with the Changing World Order, 2021; and subsequent analyses (2025–2026).
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