The risks and rewards of de-dollarisation

The article highlights rising geopolitical and payment-system risks around the Strait of Hormuz, including Iran’s new demand for $2 million in Chinese yuan or crypto for ship passage. It argues that de-dollarisation is accelerating as the dollar’s reserve share has fallen to 56.7% in 2026 from 72% in 2001, while central banks buy about 1,000 tonnes of gold annually and reduce US Treasury holdings. The piece implies increased pressure on the dollar, reserve management, and trade settlement systems, with potential market-wide implications.

Analysis

The investable message is not that the dollar dies; it is that the margin of safety in dollar intermediation is shrinking. The first-order winners are settlement alternatives that reduce exposure to USD rails—gold, non-US payment networks, and selectively commodities-linked currencies—while the losers are institutions whose balance sheets depend on dollar funding being frictionless and politically neutral. The deeper second-order effect is not reserve erosion per se, but rising transaction costs: more working capital gets trapped in pre-funded accounts, more hedging gets done at the trade level, and that quietly lifts demand for liquidity providers, trade finance, and collateral-efficient funding structures.

The Hormuz payment experiment is a signal on supply-chain design, not just FX symbolism. If even a small share of oil cargoes start pricing around sanctioned corridors via yuan, crypto, or bilateral netting, the market should expect a persistent premium for route optionality and insurance complexity—benefiting commodity traders, shipowners with compliant fleets, and banks with strong sanctions-screening franchises, while hurting smaller intermediaries and legacy trade-finance books. The key risk is escalation: any actual disruption to flow would reprice Brent and regional freight in days, but the more durable move is a months-long rerating of “clean” counterparties and ports that can prove origin, ownership, and payment transparency.

The contrarian point is that de-dollarization is likely to be partial and cyclical rather than linear. The dollar remains the cheapest emergency collateral and the only asset class deep enough to absorb global stress; that means every geopolitical shock can paradoxically create a temporary bid for USD liquidity even as nations diversify reserves over years. What is underappreciated is that gold may be the bigger structural beneficiary than any rival currency, because it solves the trust problem without requiring an alternative issuer, and central-bank accumulation can continue even if FX reserve shares stabilize.

For equities, the cleanest expression is to own balance-sheet strength and avoid duration-sensitive borrowers exposed to higher funding spreads. Banks with large trade-finance and custody franchises should outperform weaker regional lenders if sanctions complexity rises, while import-dependent EMs and shipping-sensitive industries face margin compression from higher insurance, hedging, and inventory costs. The key reversal catalyst is policy: a US–China accommodation on settlement, or a credible de-escalation in the Gulf, would unwind the de-risking trade faster than any macro data print.

Key Decisions for Investors

• Long GLD / short IEF for 3-6 months: express the view that reserve diversification and geopolitical hedging continue to favor gold over duration; target 1.5-2.0x upside versus downside if real yields stay contained.
• Long bank liquidity franchises (JPM, MS, C) vs short weaker regional funding-sensitive banks for 1-2 quarters: benefit from higher sanctions/trade-finance complexity and collateral demand; cut if U.S. policy rhetoric de-escalates.
• Long tanker/shipowner exposure with compliant fleets (DHT, FRO) on 1-3 month horizon: route/insurance friction can expand day rates without requiring volume growth; hedge with Brent downside if the Gulf risk premium fades.
• Avoid or short import-dependent EM credit proxies and local-currency debt funds over the next 2-4 months: rising hedging costs and payment fragmentation can pressure external balances before it shows up in headline reserves.
• Optionality trade: buy out-of-the-money Brent upside calls or call spreads into any renewed Hormuz flare-up, with strict time decay discipline; catalyst-driven payoff is asymmetric over days to weeks.