Not The US dollar Just a national currency within a multi -global monetary system, but during the past seven decades it turned into a major pillar of the international economy and a dominant mediator in the movement of trade and financing.
Nearly 80% of global commercial transactions are proud of it, supported not only with the weight of the American economy, but also with most strategic goods and sovereign contracts of oil and minerals to shipping and arming this currency.
With the central banks around the world retaining a large part of their dollars reserves, the US currency has gained influence that transcends the boundaries of the economy to the geopolitical impact and the ability to draw the features of the global financial system.
The value of global trade related to dollars is estimated at 33 trillion dollars annually (data in 2024), of which approximately 24 trillion dollars in the trade of goods, such as energy and food, and about 9 trillion dollars in the services sector, such as tourism, transportation, technology, and financial services.
The pricing of these transactions in dollars makes any decline in its value reflects directly on the costs of import and the stability of local currencies, especially in the countries that link their currencies with or depend on it commercially and financing.
In the Arab world, the dollar is the cornerstone of the economic and financial system, whether at the level of precautions, imports, or commercial contracts.
Bid that recent years have witnessed an escalation in the disturbing indicators associated with dollars, most notably the loss of about 11% of its value during the first half of 2025, in its worst annual performance since 1973, as well as the decline in international confidence and the spread of alternative currencies.
In this report, we highlight the most important reasons for this decline, and we solve its various repercussions on the Arab countries, their companies and citizens, in light of the accelerated financial and geopolitical transformations.
Reasons for the dollar’s decline in
Despite his steadfastness for decades as a global backup currency, several structural developments began to undermine the position of the dollar globally and pushing the countries towards a review of dependence on it:
- Excessive printing without a production cover
Since the Kofid-19 pandemic, the US government has pumped about $ 5 trillion in the economy through motivational programs known as the policy of “quantitative facilitation”, and it simply means pumping new liquidity into the market without being corresponding to actual production.
This policy contributed to raising inflation rates, and weakened confidence in the stability of the dollar in the long run.
- American public debt enlarged
The American public debt reached about 37 trillion dollars in mid -2024, at its highest level historically. With the continued relying on the printing of money to finance this debt and impose tax increases, international fears of the fragility of the foundations of the dollar were increased.
- The political use of the currency
Procedures such as the freezing of Russian balances in 2022 caused doubts about the neutrality of the dollar as a global currency. This prompted several major countries to seriously think about decolving dollar for fear of using a geopolitical pressure tool.
- Ascending alternative currencies
Recent years have witnessed the signing of a number of bilateral and regional agreements between major countries, in which local currencies are used instead of the dollar. The group is also conductedBrex“Consultations to create a new backup currency, which weakens the historical uniqueness of the dollar and paves the way for a multi -polarized global financial system.
The results of the dollar decline globally
After reviewing the caused factors, we now turn to the repercussions of this decline, which affects the entire global economy:
- Imported countries, especially related to dollars, will face an increase in the cost of imported goods, and weak in the value of revenue when transferring to their local currencies.
- Central banks that maintain huge reserves in dollars will witness a decline in the true value of these assets.
- Basic commodity prices, such as oil, gold and wheat, may become more volatile in the absence of a reliable and stable reference.
- Emerging markets will be affected by disturbances in investment flows and local currency fluctuations.
Although this decline does not necessarily mean the collapse of the dollar, it symbolizes a gradual change in the rules of the international economic game.
The effect of the dollar on the Arab economy
The Arab economy is closely related to dollars, which makes any decline in its value leaves a direct impact on financial and commercial stability in the region.
1- Arab dependence on the dollar
Since the “Petrodollar” agreement in the 1970s, most Gulf countries have linked their oil exports to dollars, which made the Gulf currencies officially link.
As for non -oil countries such as Egypt, Tunisia, and Morocco, they are indirectly linked to it by pricing imports, relying on international loans, transfers, and paying international obligations.
Arab central banks maintain hundreds of billions of dollars, most of them in the form of American treasury bonds, while most exports and imports are confined to this currency, which makes the Arab economy exposed to any fluctuations in it.
According to the International Monetary Fund, the dollar constitutes about 59% of the international official reserves, which makes its decline a direct threat to the strength of these precautions.
2- Direct repercussions on the Arab countries
- Reserve erosion
With the decline in the value of the dollar, it loses the assets of it part of its purchasing power, which calls for more amounts to finance import or support basic commodities, especially in crises periods. - Budget
Countries depend on the dollar in the pricing of exports and borrowing makes it a decisive element in public budgets. When its value decreases, real government revenues decrease while the cost of imports and debt service increases, which leads to financing gaps and financial pressures. - Internal living pressures
The high cost of import due to the weakness of the dollar is reflected in the prices of commodities in the local markets, which weakens the purchasing power of citizens, especially in countries with limited entry. - Global inflation transmission
Linking currencies to dollars makes Arab countries open to imported inflation. When prices rise globally, the effects are transmitted inward without governments have sufficient cash tools to contain.
The effects of the dollar on Arab companies
To accurately understand the impact, we analyze the reflection of the dollar’s decline in companies operating in the Arab world:
- Cost disorderMost companies depend on import in dollars, whether for raw materials or equipment. The fluctuation of the exchange rate confuses the budgets, reduces the margins, and weakens the competitiveness.
- Contract lossesLong -term projects associated with dollars, such as the energy and construction sectors, face a decline in real returns, which may lead to losses or the need for re -negotiation.
- Mixed competitivenessThe decline in the dollar may improve the ability of some exporting companies to attract international buyers at low prices, but at the same time weaken profits when transferring to the local currency, especially if the costs are local or financing externally.
Imported inflation is transmitted to the Arab markets due to the connection of local currencies to the dollar (Stradstock)
Refine on individuals
Despite the overall nature of the dollar case, the ordinary citizen is affected by tangible ways:
- The value of the transfers is erodedFamilies that depend on the transfers of expatriates in dollars lose part of their purchasing power when their value decreases.
- Vulnerable savingsSaving in dollars becomes less safe when its actual value declines despite its digital stability.
- Salary fluctuation: In some countries, salaries are paid or tied to dollars. With its low value, purchasing power decreases without changing the number.
- Price increaseThe cost of imported goods in dollars, especially food, medicine and energy, rises, which affects the budget of individuals.
- Difficulty financial planningThe fluctuation of the dollar is confused by investment, education, and travel decisions, and creates a state of certainty.
How do we adapt to the decline in the dollar?
The Arab countries, their companies, and their members must prepare for a new reality through practical steps:
- Diversify reserves: By strengthening the share of the euro, yuan, gold, or special drawing units.
- Local currency agreementsSigning agreements with commercial partners that depend on local currencies to reduce dependence on the dollar.
- Enhancing local productionInvesting in vital sectors such as food, energy, and medicine to reduce import and strengthen economic independence.
- Financial Division: Using financial tools such as futures, currency boxes, and multi -currency accounts to protect profits from market fluctuations.
- Contract Review: Modifying long -term contracts to include currency baskets instead of relying on the dollar.
- Diversification of financing and suppliersStay away from the exclusive dependence on the dollar to buy or external borrowing.
- Diversification of savings: Savage distribution to several assets such as alternative currencies, gold, real estate, or investment certificates.
- Observation of transfers: Follow the exchange rates and choose the appropriate time to transfer money, or keep a portion of them locally.
- SpendingRationalizing consumption and improving financial planning to meet high prices and market fluctuations.
The dollar is no longer guaranteed as before. The change is underway, and everyone must interact with it wisely. The transformation towards a multiple financial world is no longer a virtual scenario, but rather a form of formation.
The Arab countries are required today to re -evaluate their exposure to this currency, not only to face financial fluctuations, but to fortify deeper geopolitical repercussions. The crises do not warn before they occur, but gradually sneaks until they are imposed as a fait accompli.
Governments, companies, and individuals today start practical steps to embrace, before the cost of delay becomes exorbitant.