In January 2026, when Iranian Supreme Leader Ali Khamenei died and US-Israel military action in the Persian Gulf escalated, something instructive happened: the dollar index crossed $100 for the first time since November 2024 and investors piled back into US Treasury bonds. Dollar gains as investors flee risk on escalating Middle East war, Reuters reported, as the dollar index rose on March 23, 2026, while the euro and yen continued to struggle. CioinvestmentclubThe world's most debated currency had, once again, done what it always does in a crisis. It strengthened.

This is the central paradox of the de-dollarisation debate in 2026. The movement to reduce reliance on the US dollar is real, measurable, and accelerating across trade settlement, reserve management, and commodity pricing. And yet, when geopolitical stress peaks, the dollar remains the world's reflexive safe haven. Understanding what is actually happening — and what is not — requires separating the structural from the cyclical, and the deliberate from the compelled.

What the data says

The most authoritative measure of dollar dominance is the IMF's Currency Composition of Official Foreign Exchange Reserves (COFER) dataset. The numbers are unambiguous about the direction of travel. A March 2026 academic study using IMF COFER data found that the average USD share in total reserves declined by 12 percent between 2015 and 2025, while the gold share increased by 8 percent and other reserve assets by 4 percent. MDPI At the end of 2024, the dollar accounted for 58.52 percent of total FX reserves according to IMF data, falling further to 56.92 percent by the end of Q3 2025 — a two-decade low. Cioinvestmentclub

To put the long arc in perspective: the dollar's share of central bank reserves has fallen by twelve percentage points since 1999, from 71 percent to 57.3 percent in 2024. Policy Center That is a sustained, structural decline across a quarter century. And yet the dollar still accounts for more than twice the reserve share of its nearest rival, the euro, which sits at approximately 20 percent.

The dollar's dominance is also highly uneven across the functions of money. Its retreat is clearest in reserves and bond markets, and most contested in commodity pricing. It remains largely unchallenged in trade invoicing and foreign exchange volumes. In 2022, the greenback dominated 88 percent of traded FX volumes — close to record highs — while the Chinese yuan made up just 7 percent. J.P. Morgan The dollar share of global trade finance was 84.1 percent in April 2024. Cmacrodev The headline about de-dollarisation obscures how deeply embedded the dollar remains in the plumbing of global commerce.

Where the real shift is happening: gold

The most consequential move away from dollar-denominated assets is not into yuan or rupees. It is into gold. Gold's share of global foreign reserves has risen from around 13 percent in 2017 to roughly 30 percent as of late 2025. U.S. News & World Report This is a dramatic reallocation over eight years, driven overwhelmingly by emerging market central banks.

Between 2015 and 2025, physical gold accumulation took place most aggressively in Russia (915 metric tons), China (538 metric tons), India (322 metric tons), and Japan (81 metric tons). MDPI The study notes an important distinction: in China, 91 percent of the increase in gold's share of reserves is attributable to price appreciation, not new purchases. In Russia, active accumulation accounts for 22 percent of the increase — the legacy of a sanctions-driven exit from dollar assets that began after 2014. India sits between the two, with 80 percent of the increase explained by price appreciation and 20 percent by active accumulation.

The implication is that much of the gold surge is passive — central banks holding existing stocks that have appreciated sharply — rather than an aggressive buy-and-dump of dollar assets. Gold prices are forecast to climb toward $4,000 per ounce by mid-2026, J.P. Morgan which will further inflate gold's measured share of reserves even without additional purchases.

The sanctions accelerant

The single most important catalyst of the current de-dollarisation wave was the Western decision in February 2022 to freeze approximately $300 billion in Russian central bank reserves held in dollar and euro-denominated assets. The message to every government that had not already considered the question was stark: dollar-denominated assets held abroad are not sovereign property if Washington decides otherwise.

Russian central bank dollar holdings declined from $383 billion in January 2022 to $130 billion by late 2023. Discovery Alert The pace of that shift — forced by sanctions rather than chosen — illustrated what the IMF estimates: 30 to 40 non-aligned nations hold more than 10 percent of reserves in dollar-denominated assets while simultaneously facing or fearing US sanctions exposure, creating structural pressure for diversification even among nations not currently under sanctions. Discovery Alert

The SCO bloc has moved furthest along this path. By 2025, 97 percent of trade among SCO nations — including India, Russia, China, Iran, Pakistan, Kazakhstan, Kyrgyzstan, Tajikistan, Uzbekistan, and Belarus — was conducted in local currencies, not USD or euro. Wikipedia This is a near-complete de-dollarisation of intra-bloc trade for a grouping that covers a substantial share of the Eurasian landmass. China's Cross-Border Interbank Payment System (CIPS) — its alternative to SWIFT — had 1,467 indirect participants across 119 countries as of January 2025, linking 4,800 banks in 185 countries. Chicagopolicyreview

India's position: deliberate but carefully bounded

India's approach to de-dollarisation is the most strategically interesting in the world precisely because it is the most carefully calibrated. New Delhi has explicitly refused to frame its currency initiatives as anti-dollar. The Governor of the Reserve Bank of India stated that de-dollarisation is not India's objective as part of BRICS. Diplomatist And yet the RBI has been methodically building the infrastructure for a rupee-settled global trade network.

In August 2025, the RBI eased rules for Indian banks through Circular No. RBI/2025-26/71, enabling them to open Special Rupee Vostro Accounts for foreign correspondent banks without prior RBI approval — with over 80 SRVAs already operational across more than 20 countries at the time of the circular. Mondaq By 2025, the RBI had permitted 123 correspondent banks from 30 trading partner countries to open 156 Special Rupee Vostro Accounts with 26 banks in India. Diplomatist The countries include Russia, the UK, Germany, Singapore, Malaysia, Oman, Kenya, Sri Lanka, and Tanzania — a surprisingly broad coalition that extends well beyond India's traditional BRICS partners.

Now India is proposing to go further. The Reserve Bank of India has recommended that a proposal connecting central bank digital currencies be included on the agenda for the 2026 BRICS summit, which India will host later this year — a move that, if accepted, would mark the first formal attempt by the bloc to interconnect their sovereign digital currencies. Fintool The proposal builds on India's Unified Payments Interface, which processed over 106 billion transactions in H1 2025 and accounts for approximately 85 percent of all domestic digital transactions. The e-Rupee, India's retail CBDC launched in December 2022, provides the domestic foundation for the international architecture being proposed.

The strategic logic is clear. India wants the rupee to carry more weight in global trade without severing its deep integration with the dollar-denominated financial system. Its FDI comes overwhelmingly from the US, Singapore, and Europe. Its exports are priced in dollars. Its equity markets are tied to global dollar liquidity. The rupee internationalisation project is about reducing marginal dollar dependency — in trade with Russia, Iran, and frontier markets where dollar settlement is costly or restricted — not about confronting the dollar's systemic role.

The Trump variable

The current de-dollarisation wave has a powerful accelerant that did not exist in earlier cycles: a US administration that has made the dollar's weaponisation explicit and that other countries perceive as an unreliable custodian of the international financial order. In 2025, during the second presidency of Donald Trump, many countries began moving away from the US dollar as a foreign currency reserve, coinciding with the US beginning to pursue an isolationist foreign policy and erratic economic policy. Wikipedia

Trump's response has been to threaten 100 to 150 percent tariffs on BRICS nations pursuing de-dollarisation, a posture that has paradoxically confirmed the concern that drove the movement in the first place. Countries that might have been content to hold dollar reserves quietly are now calculating the political cost of being perceived as dependent on a financial system that its own custodian deploys as a coercive instrument.

What is not happening

The dollar is not being replaced. No currency has the depth, liquidity, legal infrastructure, and network effects to serve as a global reserve currency at scale. The yuan accounts for less than 5 percent of global reserves and faces structural constraints: China's capital controls, its reluctance to run the current account deficits that would supply yuan to the world, and the limited convertibility of its currency. The rupee is not yet fully convertible. The euro is backed by a fragmented sovereign debt market. Gold cannot be wired. Bitcoin cannot clear size without slippage.

What is happening is a gradual, structural, multi-speed shift toward a world in which the dollar is dominant but not monopolistic — in which regional blocs settle trade in local currencies, central banks hold more gold and fewer Treasuries, commodity prices increasingly accommodate non-dollar denomination, and the network of dollar alternatives grows slowly but persistently.

The speed of this transition depends substantially on Washington's own behaviour. Every sanctions episode, every weaponisation of SWIFT, every erratic tariff announcement accelerates the calculation by non-Western governments that dollar dependency is a strategic vulnerability. The dollar's greatest long-term threat is not the yuan. It is American foreign policy.

India, in this context, is building its hedge carefully — expanding rupee infrastructure, accumulating gold, maintaining deep dollar integration, and refusing to frame any of it as confrontational. It is the correct posture for a country that lives in the dollar system while hedging against it. And in 2026, with the BRICS CBDC proposal on the table and 156 rupee vostro accounts operational across 30 countries, the hedge is becoming more substantial than it has ever been.