US Dollar Hits Two-Year High Despite Global Push for De-Dollarization

Efforts to reduce global reliance on the US dollar have yet to make a significant dent, as the currency surged to a two-year high, bolstered by rising Treasury yields and a resilient US economy.

According to a Financial Times report, this growth persists even as initiatives by the BRICS alliance aim to promote local currencies and reduce the dominance of Western financial systems.

The US economy ended 2024 on a strong note, moving closer to the Federal Reserve’s 2% inflation target after a remarkable recovery from record-high post-pandemic inflation. Despite calls from BRICS nations for countries in the global south to adopt alternatives to the dollar, the greenback remains dominant. Two years into their de-dollarization campaign, the bloc has struggled to significantly disrupt the dollar’s global influence.

Analysts foresee continued growth for the dollar, supported by robust US economic performance and potential tariff policies under President-elect Donald Trump. Goldman Sachs recently upgraded its forecast for the dollar, projecting a 5% rally over the next year.

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“We anticipate the dollar will strengthen further, fueled by economic outperformance and new tariffs,” said Kamakshya Trivedi, a Goldman Sachs analyst. “The risk remains tilted toward continued dollar strength.”

As de-dollarization efforts falter, the US dollar’s resilience underscores its enduring role as a central pillar of the global financial system.

Kostadin Dimitrov