The US Dollar After Ukraine

David Reavill
4 min readDec 5, 2022
US Flag over New York Stock Exchange

The lifestyle you and I have enjoyed over the past generation has been due, in no small part, to the US Dollar’s position as the International Reserve Currency.

In short, the Dollar’s Reserve status has meant that major international trade is priced in dollars. The Dollar has been the hub around which global finance revolves. As China was developing into a worldwide manufacturing center 50 years ago, it was only natural that the products it sold would be priced in dollars.

Chinese trade reinforced the Dollar’s reserve status. China was following the same route Japan had taken the generation before — selling their goods to the vast American marketplace while using the Dollar as the price and exchange vehicle. It was an interchange that made China and Japan wealthy and provided the American consumer with a lower-cost standard of living. Something that Americans would come to rely upon.

Ukraine has changed all that.

Americans often visualize Ukraine as a faraway conflict with little implication for us. Yes, we are spending an incredible amount to support Ukraine. US support for Ukraine is scheduled to exceed $100 Billion shortly. But Ukraine will likely have little effect on our day-to-day lives, we assume.

I wouldn’t be so sure.

The Ukraine conflict has morphed into an Economic War, no less than a physical one. And here, the combatants include those of us in the US. The first salvo in the economic war was delivered by President Biden when in March, he initiated a boycott of all Russian oil and gas imports into the US.

This action by the President escalated the conflict from a regional war to an international economic struggle. One that now includes both the European Union which supports the US. And an increasingly cohesive East, which has increasingly supported Russia.

In addition to the oil boycott, Biden began removing Russia from the SWIFT International Transfer System. SWIFT is the actual mechanism where international member banks initiate a financial transaction. SWIFT is denominated in US Dollars.

By removing Russia from SWIFT, Biden sent Russia to the already waiting Chinese alternative. And just like that, the Dollar lost a substantial portion of its “market share.” At least one-third of all international transactions will now move from SWIFT and away from the US Dollar.

When you step back and consider all that has come from Biden’s initial reaction to the Ukraine conflict, you can’t help but think that this was a reckless, knee-jerk reaction with never considered implications.

We asked our Presidents to be slow to anger and reasoned in their responses to world events. The United States is a powerful and influential country with lots to lose if international financial order is not maintained.

But in one fiery outburst, this President has overturned what has taken years to establish. Joe Biden has ignited a financial firestorm like toppling a table full of dominoes.

The Boycott of Russian oil and gas directly contributed to the higher oil and gasoline prices we’ve experienced in the months since. Driving Russia away from the SWIFT Settlements system has caused other nations to question America’s commitment to the international financial systems. Other countries, principally India and Iran, are looking to join a Russo-Chinese system that would be a direct competitor to the Euro-American SWIFT system.

Perhaps even more problematic, Saudi Arabia is rumored to be looking to join this new Eastern Monetary System. Saudi Arabia is the principal partner in the US Petro-Dollar. Saudi Oil sales, priced in dollars, created Petro-Dollars, one of the mainstays of the Dollar reserve status. If the Petro-Dollar were to decline, that would remove one of the remaining supports for the Dollar as a reserve.

As you can readily see, the ramifications of the President’s actions in March are still unfolding.

But one thing we can be sure of, removing Russia from the Swift System may be the final blow to US Dollar hegemony.

Econ Briefs

We often talk about Purchasing Managers. These people buy the raw materials and components that the rest of the company puts together to make a finished product.

The Purchasing Managers Index is perhaps our best accurate “Leading Indicator,” so when you look at a country’s PMI, you get a picture of how its entire economy is performing. And overnight, we’ve had a slew of countries report their PMI, giving us an objective look at global commerce.

One slight caveat here is that the Purchasing Managers can be a short-term indicator and turn on a dime as economic conditions change.

But for now, here is how the Purchasing Managers see things:

Economies that are shrinking:


Today’s release is on two PMI measures: service and overall composite. The following countries had mixed readings, one positive and one negative measure.


And just one country had both measures solidly positive. That most positive PMI reading, by far, is India. An Indication that India is exhibiting the most robust potential economic growth of the major economies.

What’s changed in India? I would suggest that the emerging energy supply from Russia is driving this Indian Economic Boom.

The United States will release its latest PMI reading shortly. And it’s expected to show contraction.

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David Reavill

David Reavill writer + finance +iconoclast + hiker + Pennsylvania #valueside daily podcast + medium + meditate