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Opinion
Andy Mukherjee

The Mobile Phone Is Asia’s Hedge Against the Dollar

Southeast Asia’s biggest economies are getting interoperable with their currencies thanks to technology. It’s a small but important step in de-dollarization.

A move against dollar dominance.

A move against dollar dominance.

Photographer: JOHANNES EISELE/AFP

Currency values fluctuate all the time, but some changes leave a lasting impression on the banking industry. In the Bretton Woods-era of fixed exchange rates, the 1967 devaluation of the British pound was one such seminal event. It made demand for dollars explode in Asia. Out of that craze, Dick van Oenen, an enterprising Dutch currency trader at Bank of America, fashioned an entire cross-border financial center in Singapore.

More than a half-century later, the US currency is once again in the limelight, as evidenced by its surge to a 20-year high and its weaponization by Washington to isolate Russian President Vladimir Putin over his war in Ukraine. This, too, will leave a long shadow. But this time around, the real opportunity for Asian banks is to help moderate the demand for dollars, a process analysts refer to as “de-dollarization.” Financiers can’t dictate the choice of invoicing currency to exporters; nor can they taper investors’ safe-haven yearnings. What they can do, however, is to cut the American currency out of those cross-border payments where it’s superfluous.