{"id":84286,"date":"2026-01-27T11:19:10","date_gmt":"2026-01-27T05:49:10","guid":{"rendered":"https:\/\/vajiramandravi.com\/current-affairs\/?p=84286"},"modified":"2026-01-27T11:19:10","modified_gmt":"2026-01-27T05:49:10","slug":"trump-de-dollarisation-and-the-global-gold-rush-explained","status":"publish","type":"post","link":"https:\/\/vajiramandravi.com\/current-affairs\/trump-de-dollarisation-and-the-global-gold-rush-explained\/","title":{"rendered":"Trump, De-Dollarisation, and the Global Gold Rush Explained"},"content":{"rendered":"<h2><b>De-Dollarisation Latest News<\/b><\/h2>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Gold prices have surged past the $5,000 per ounce mark for the first time, even as the US dollar slid to a four-month low. The rally is being driven not just by households, but by aggressive buying from central banks worldwide.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Major central banks have emerged as key buyers of gold, signalling a strategic shift in reserve management.\u00a0<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">While households traditionally buy gold as a hedge, it is the actions of central banks that underline a deeper structural change in the global financial system.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">The underlying driver of this trend is <\/span><b>Donald Trump<\/b><span style=\"font-weight: 400;\">. His trade wars, sanctions-heavy foreign policy, and use of the US dollar as a geopolitical weapon have prompted many countries to reduce reliance on dollar-denominated assets.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">As trust in the <\/span><b>dollar\u2019s neutrality weakens<\/b><span style=\"font-weight: 400;\">, gold\u2014being politically neutral and free from sanctions risk\u2014has regained prominence as a reserve asset.<\/span><\/li>\n<\/ul>\n<h2><b>RBI\u2019s Gold Holdings Drive Forex Reserve Growth<\/b><\/h2>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">India\u2019s central bank, Reserve Bank of India, reported a sharp rise in foreign exchange reserves, with nearly one-third of the increase coming from gains in the value of its gold holdings.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Although the RBI added only a small quantity of gold, the 70% rise in gold prices over the past year significantly boosted the value of its reserves, far outpacing gains from foreign currency assets.<\/span><\/li>\n<\/ul>\n<h3><b>Gold\u2019s Rising Share in Reserves<\/b><\/h3>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">What matters more than absolute purchases is gold\u2019s share in total reserves.\u00a0<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">In India\u2019s case, gold now accounts for <\/span><b>17% of forex reserves<\/b><span style=\"font-weight: 400;\">, up from 12% a year ago. Similar shifts are visible across several emerging and advanced economies.<\/span><\/li>\n<\/ul>\n<h3><b>Global Central Banks Buy More Gold<\/b><\/h3>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">The RBI is not alone. Central banks in <\/span><b>Poland, Kazakhstan, and Brazil<\/b><span style=\"font-weight: 400;\"> were among the world\u2019s largest gold buyers in 2025, according to data from the <\/span><b>World Gold Council<\/b><span style=\"font-weight: 400;\">.\u00a0<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">This highlights a coordinated global trend rather than isolated national decisions.<\/span><\/li>\n<\/ul>\n<h2><b>Debasement of the US Dollar: What\u2019s Driving the Shift<\/b><\/h2>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Experts argue that a combination of trade protectionism, sanctions, and the emergence of a multipolar world is gradually pushing global investors away from the US dollar.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">US President Trump has repeatedly asserted the need to preserve the dollar\u2019s global dominance, even threatening <\/span><b>BRICS countries<\/b><span style=\"font-weight: 400;\"> with punitive tariffs if they pursue <\/span><b>alternatives to the dollar<\/b><span style=\"font-weight: 400;\">.\u00a0<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Ironically, his aggressive use of tariffs, sanctions, and economic coercion has accelerated doubts about the dollar\u2019s neutrality and reliability.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">These dynamics have contributed to a sharp weakening of the US dollar\u2014down about <\/span><b>9% in 2025<\/b><span style=\"font-weight: 400;\">, its steepest fall in nearly a decade.\u00a0<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">As confidence in the greenback erodes, investors and central banks have increasingly turned to gold as a safe-haven asset.<\/span><\/li>\n<\/ul>\n<h3><b>Why It Matters<\/b><\/h3>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">De-dollarisation threatens to dilute US financial power, reducing Washington\u2019s ability to shape global trade and financial systems.\u00a0<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">At the same time, policy uncertainty and geopolitical sabre-rattling have boosted demand for gold, reinforcing its role as a hedge against currency debasement and geopolitical risk.<\/span><\/li>\n<\/ul>\n<h2><b>Weaponising Capital Flows: De-Dollarisation Accelerates<\/b><\/h2>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">De-dollarisation is most visible in commodities, with a growing share of global energy trade now priced in non-dollar contracts, weakening the dollar\u2019s traditional dominance.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">The trend is extending to government bond holdings.\u00a0<\/span>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"2\"><span style=\"font-weight: 400;\">The Reserve Bank of India has steadily reduced its US Treasury exposure, with holdings falling to $186.5 billion in November 2025 from $234 billion a year earlier.\u00a0<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"2\"><span style=\"font-weight: 400;\">China\u2019s US government bond holdings have also dropped to a 16-year low.<\/span><\/li>\n<\/ul>\n<\/li>\n<\/ul>\n<h3><b>Institutional Investors Start Exiting US Treasuries<\/b><\/h3>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Concerns are no longer limited to states.\u00a0<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Denmark\u2019s major pension funds announced plans to exit US Treasuries, citing geopolitical uncertainty, including comments by Donald Trump, andDanish pension funds have taken similar positions.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Earlier this month, Deutsche Bank warned that US threats against Europe could prompt the continent to cut holdings of US debt, effectively <\/span><b>weaponising capital flows<\/b><span style=\"font-weight: 400;\">.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">The European Union holds about $10.4 trillion in US portfolio assets, accounting for nearly 29% of foreign ownership.\u00a0<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Trump has warned of \u201cbig retaliation\u201d if Europe sells US bonds, underscoring how financial flows are becoming tools of geopolitical leverage.<\/span><\/li>\n<\/ul>\n<h2><b>The Past: How De-Dollarisation Gained Momentum<\/b><\/h2>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">The move away from the US dollar gathered pace after United States Government froze Russia\u2019s foreign exchange reserves following its invasion of Ukraine in February 2022.\u00a0<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">This action heightened concerns among countries about the safety of holding dollar-denominated assets.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">De-dollarisation has been gradual but persistent. Data from the IMF show that the US dollar\u2019s share in global foreign exchange reserves fell to a 30-year low of 58.5% in 2024, down from 71% in 1999, reflecting steady diversification by central banks.<\/span><\/li>\n<\/ul>\n<h3><b>The Future: Dominance for Now, Uncertainty Ahead<\/b><\/h3>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Despite these shifts, the <\/span><span style=\"font-weight: 400;\">US dollar remains overwhelmingly dominant<\/span><span style=\"font-weight: 400;\">, accounting for 89% of global over-the-counter foreign exchange turnover.\u00a0<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">However, if current US policies and rhetoric continue, especially under the Trump administration, the pace of diversification away from the dollar could accelerate, leading to more visible structural change in the global monetary system.<\/span><\/li>\n<\/ul>\n<p><b>Source:<\/b> <strong><a href=\"https:\/\/indianexpress.com\/article\/explained\/explained-economics\/trump-dedollarisation-gold-surge-10495762\/\" target=\"_blank\" rel=\"nofollow noopener\">IE<\/a><\/strong><\/p>\n","protected":false},"excerpt":{"rendered":"<p>De-Dollarisation is accelerating as Trump\u2019s trade wars, sanctions, and policy uncertainty weaken the dollar, pushing central banks worldwide to increase gold holdings.<\/p>\n","protected":false},"author":18,"featured_media":84310,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[18],"tags":[4955,60,22,59],"class_list":{"0":"post-84286","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-upsc-mains-current-affairs","8":"tag-de-dollarisation","9":"tag-mains-articles","10":"tag-upsc-current-affairs","11":"tag-upsc-mains-current-affairs","12":"no-featured-image-padding"},"acf":[],"_links":{"self":[{"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/posts\/84286","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/users\/18"}],"replies":[{"embeddable":true,"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/comments?post=84286"}],"version-history":[{"count":0,"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/posts\/84286\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/media\/84310"}],"wp:attachment":[{"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/media?parent=84286"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/categories?post=84286"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/tags?post=84286"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}