ASEAN Could Use Local Currencies For Trade, Ditch The US Dollar

Juhi Mirza
ASEAN flags
Image Source: Pixabay

ASEAN, a powerful 10-nation bloc, seems to be expanding its base by popularizing the notion of local currency supremacy in an increasingly multipolar world. These nations are now working on launching a new agenda that encourages local currency support via trade proceedings. The initiative has already gained traction among the nations as of now. If popularized on a massive scale, this development can pose certain serious implications for the US dollar’s prestige and reputation.

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ASEAN To Promote Local Currency Narrative

ASEAN country flags
Source: Beawiharta Beawiharta / Reuters /

ASEAN nations are now looking at a stark notional shift that may help their collective currencies gain worldwide recognition.

The idea had gained momentum at the 42nd ASEAN summit, where concepts related to promoting local currency on a global scale were deemed of supreme importance. The move is said to bolster the bloc’s presence on an intercontinental scale and, at the same time, assist them in getting away from the USD’s strong foothold in space.

“At the 42nd ASEAN Summit, held in Labuan Bajo, Indonesia, ASEAN members signed an agreement. To push for better regional payment connectivity and the use of local currency transactions (LCT). The move is seen as the bloc’s strategy to transition away from established currencies such as the US dollar.”

The development is now gaining traction primarily due to the US Federal Reserve’s stance on hiking rates.

The aggressive stance on spiking the rates has compelled the developing nations to hike their interests as well in efforts to combat the depreciation of their own currencies. It seems that the vicious cycle is now inching towards its conclusion, where the bloc could finally decide to limit the usage of the US dollar.

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ASEAN New Agenda: To Deepen Trade with Allies

In a new wave of change, ASEAN is now looking forward to deepening its ties with its allies. In a recent AITIGA meeting of ASEAN in Malaysia, this agenda was open for an official dialogue. The development included spearheading the theme of “more trade-facilitative and beneficial for businesses across the region,” to promote intra-nation dependence.

“Through the local currency transaction initiative. ASEAN hopes to increase trade within the bloc, deepen regional financial integration, strengthen financial resilience, and bolster regional value chains.”

Dumping of the US Dollar: A Highlight of the 44th ASEAN Summit?

With ASEAN actively exploring themes of promoting intra-bloc trade, the speculation of the 10-nation pack spearheading and ditching the US dollar narrative is now gaining credible momentum.

With the Indonesian President’s remark on the US dollar being weaponized, the chances are that the bloc could bring the agenda towards its conclusion or float a new fundamental change in the upcoming summit that may limit the usage of USD in the long haul.