Report finds claims of US 'de-dollarisation' exaggerated, warns on AUD ties

A new report has found that claims of US 'de-dollarisation' are exaggerated, with biased reporting from Russian and Iranian outlets overstating the dollar's decline and highlighting continuing risks for Australia's reliance on the USD.

Australia's investment landscape is deeply connected to the US dollar, with superannuation funds holding over AUD$400 billion in US assets and the national commodities sector largely operating in USD. Significant portions of the Reserve Bank of Australia's foreign reserves are also USD-denominated, and petrol prices in Australia closely follow fluctuations in the greenback.

The Top Money Compare review analyses these dependencies within the broader context of global reporting on 'de-dollarisation' - the shift by countries and economic blocs to reduce their usage of the US dollar in trade, reserves, and investment. The analysis covered 190 sources, including media from various countries, academic bodies, financial institutions, NGOs, and banks.

Global media landscape

The Propaganda Risk Score developed by Top Money Compare graded articles based on citation quality, empirical support, and the use of sensationalist language. According to the report, Russian media received the lowest credibility score (Propaganda Risk Index 1.85), closely followed by Iranian media (2.15), with both using emotive and sometimes alarmist rhetoric predicting the rapid collapse of US dollar dominance.

Conversely, academic institutions and global banks scored much higher (4.56 and 4.07 on credibility, respectively), consistently stating that US dollar dominance is eroding gradually and remains far from being replaced. A recent JP Morgan analysis highlighted that the US dollar is used in 88 per cent of all foreign exchange transactions, with the Chinese yuan accounting for only 7 per cent. Similarly, Robert Wade of the London School of Economics wrote that the US dollar's dominance is likely to continue for the foreseeable future due to the absence of viable alternatives.

Major Western outlets, including the Financial Times and Wall Street Journal, acknowledge some drivers of change, such as BRICS expansion and digital currencies, but point to the depth, liquidity, and trust associated with the dollar as reasons for its continuing indispensability in international finance.

Differences in reporting

The report compared academic sources and Russian state media, finding academic institutions scored 4.92 for citation quality versus 1.67 for Russian media. Academics also used more empirical evidence (4.3 versus 1.69) and applied less dramatic language regarding the speed and certainty of USD's decline (1.96 for academics versus 4 for Russian media in terms of predicted speed of decline, and 2.31 versus 3.63 for absolutist terminology).

Similar contrasts were evident between banks and Iranian media. Banks and financial institutions exhibited more professional language (4.34) and relied on data (3.93) while Iranian outlets used more emotional (2.85) and alarmist language (3.23). Iranian media displayed a more negative tone towards the US (1.80) compared to banks (2.59).

Australia's exposure

Russell Gous, Editor-in-Chief at Top Money Compare, says: "A slow, deliberate de-risking is underway, driven by Australia's top trading partners, China and India. China is expanding gold reserves and yuan trade, while India seeks partners beyond the US due to high tariffs. This leaves questions for Australia, which is heavily invested in US assets through superannuation funds, yet reliant on Asia for trade.

He continues, "If access to US dollars became politicised in a future crisis, as some economists warn, Australia could feel ripple effects. There is a risk that exaggerated claims could influence policymaking and investor decisions. Our analysis shows the need for Australians to look past biased reporting and understand the actual pace of change in currency markets."

Gous further states, "Multiple currencies might gain modest shares over time, but the US dollar's advantages - like dollar's liquidity, legal protections and market reach - can't be matched. The numbers support this view. The USD remains involved in nearly 90 per cent of global FX transactions with USD $6.6 trillion in average daily turnover, according to the latest Bank for International Settlements survey."

Data from 2024 shows that the US dollar accounted for 58 per cent of global disclosed reserves, well ahead of the euro (20 per cent), Japanese yen (6 per cent), pound sterling (5 per cent), and Chinese renminbi (2 per cent).

The report indicates that while diversification away from the US dollar by some central banks and global institutions is occurring, the extent of de-dollarisation in international finance is limited when considered alongside the scale of the US dollar's involvement in global transactions and reserves.