Is Dedollarization Inevitable?

For decades, the U.S. dollar has reigned supreme as the world’s reserve currency. But over the past three years, a quiet shift has accelerated - one that could have massive implications for investors. Dedollarization is becoming a reality, and while the process may be gradual, it’s proving to be both painful and unavoidable.

One of the most significant developments has taken place in the commodities market. Russia, the world’s second-largest oil exporter, has been selling to its trading partners in their local currencies. In other words, while the U.S. and Western nations continue to trade primarily in dollars, countries like China, Brazil and Turkey are actively adopting alternatives to the dollar.

The data speaks for itself. Back in 2015, an estimated 90% of Russia–China bilateral trade was settled in U.S. dollars. By 2024, that figure has flipped—well over 90% of transactions are now conducted in Russian rubles and Chinese yuan. In parallel, both countries have launched their own cross-border payment systems as an alternative to the SWIFT network.

This trend goes beyond changes to trade and payment systems—it also touches another core function the dollar has historically served: acting as a reserve asset and a backing mechanism for other currencies. For example, at least 41 countries now hold Chinese yuan as part of their reserve mix through swap arrangements, totaling over 4 trillion yuan.

And when it comes to clear price signals, gold has taken the lead as the reserve asset of choice. Between 2022 and 2025, central banks around the world shattered records for gold purchases, signaling a decisive shift away from traditional dollar-backed reserves and pushing prices to historic highs.

Was JP Morgan Right About Gold?

Gold prices have been breaking record after record, climbing a cumulative 81.5% since January 1st, 2022 and approaching $3,500 per ounce. This surge has been driven primarily by two forces: rising global conflict—which fuels demand for safe-haven assets—and an accelerating push by many countries to diversify their transaction mechanisms.

The weaponization of the SWIFT payment system, along with the freezing of foreign assets from nations like Russia and Iran, has prompted other countries—particularly in the East—to seek greater financial independence. Central banks’ purchases of gold have increased fivefold since the invasion began, and demand from governments is expected to remain high for some time to come.

Contrary to what one might initially assume, this trend isn’t limited to Eastern nations—it also includes developing countries as well as NATO members and close U.S. allies. In fact, Poland’s gold reserves have now surpassed those of the European Central Bank. India has repatriated more than 100 tonnes of gold from the Bank of England, while the Central Bank of Nigeria has also brought home a portion of its holdings.

All signs seem to confirm the timeless quote famously attributed to J.P. Morgan during his 1912 testimony before Congress: “Gold is money. Everything else is credit.” Today, that sentiment is resurfacing, as countries around the world begin to question their reliance on the U.S. dollar and the American-led system of international payments. The growing shift toward alternative commodities, bilateral trade agreements, and local currencies is opening a new window of opportunity for different kinds of investments.

In this context, emerging market assets stand to benefit the most from the global shift. As investors and central banks seek greater diversification, these countries offer lower debt burdens, stronger commodity exposure, and favorable demographics. Their currencies are now gaining strength, while real assets like farmland and natural resources are attracting interest as stores of value.

How Colombia is Standing Out

Colombia is one of the emerging markets with the most to gain from current global trends. Over the past 25 years, it has emerged as one of the world’s most compelling success stories. Once plagued by political instability, Colombia today represents a model of economic growth, foreign investment, and institutional strength within Latin America. Its present-day is one of peace, stability, and sustained expansion—qualities that are increasingly rare in a fragmented global economy.

One important aspect to highlight is that this progress has taken place even under administrations that were not overtly pro-market, underscoring the country’s high level of institutional resilience and political stability. Naturally, and as a consequence, the Colombian peso and Colombia-linked assets have appreciated significantly in recent years, reflecting growing investor confidence in the country’s long-term fundamentals.

Over the past two decades, Colombia’s real estate market has shown steady and consistent appreciation. Property values and physical asset prices in the country’s major cities have, on average, increased by a factor of 4.5 during that time—a reflection of both growing demand and the structural improvements supporting the whole economy.

According to the IMF, the solid macroeconomic institutional environment of Colombia, built on a rule-based fiscal framework, a flexible exchange rate, and a modern inflation-targeting regime, has been the cornerstone of its macroeconomic stability.

For investors, the dedollarization process could open up a big opportunity: as the dollar weakens, Latin American currencies could strengthen. In fact, since the beginning of the year, the dollar has already depreciated by 7.1% against the Colombian peso. Given the current environment, this trend could very well accelerate even further in the coming years.

The declining value of the dollar favors investment portfolios with broader international exposure, especially in countries that are major commodity producers. As the dollar continues to weaken against other currencies, one thing is becoming clear: assets tied to commodities in foreign markets—particularly in Latin America—are well positioned to come out ahead.

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