The US dollar is in real trouble. First of all, the BRICS countries have collectively decided (with massive influence from China) to abandon the U.S. dollar in favor of the Chinese Yuan. This initiative started a global movement to reduce demand for the US dollar in favor of other currencies. And as if that were not enough, Kenya becomes one of the first African countries to publicly advocate for the abandonment of the US dollar. We are clearly witnessing an eventual collapse of the American hegemony.
A couple of days ago, Kenyan President William Ruto proposed that his government will now purchase oil using Kenyan Shillings rather than the US dollar, President Ruto accused oil cartels of hoarding dollars in response to the dollar crisis, causing a fuel shortage in the country. For many, this turnaround indicates the end of the petrodollar. The country has had a real-time dollar crisis, with the Kenyan shilling (KSH) weakening against the dollar. As insurance, President Ruto was quick to respond to the worries of many, with the dollar being a major transaction commodity for many international trades. After claiming that his government will now purchase oil using Kenyan shillings, he said the following:
“I want to assure those in Kenya who were facing challenges of access to dollars that we have taken steps to ensure dollar availability in the next couple of weeks, things are going to be different because our fuel companies will not be paying for fuel in Kenya shillings.[…] We just concluded last week an arrangement in our fuel sector that will see Kenya access our fuel needs in a differed six-month credit. That will eliminate a demand of $500 million every month from this market.” said President Ruto at the Nairobi Security Exchange.
In early March, energy and Petroleum Cabinet Secretary Davies Chirchir said that the Kenyan government signed a deal with Saudi Aramco to supply Kenya with diesel and super for the next six months. Additionally, Abu Dhabi National Oil Company planned on delivering three cargoes of Super petrol every month.
The plan to abandon comes as a result of witnessing the then-Democrat-controlled Congress, go on a spending spree of over several trillion dollars in Omnibus Bills. Those countries realized there is nothing backing the value of the US dollar and they saw that the US Congress has no plans at all to reign-in spending. Hence, the reign of the dollar is coming to an end. Does this mean that the hegemony of the United States is over? We are witnessing perhaps one of the most pivotal moments in human history. We are witnessing in real time a shift in power dynamics between the most powerful nations on the planet. China is already asserting its political and economic domination over the African continent. Abandoning the dollar in favor of another currency epitomizes the end of the petrodollar. In one sense, this can also be a good thing because the end of the petrodollar means that the market will not dictate which currency is best to be used to conduct international trade rather than having countries arbitrarily decide and impose their currencies on the rest of the world.