SINGAPORE, Sept. 2 (Xinhua) -- Asia's economies are gradually reducing their reliance on the U.S. dollar for regional trade and finance as geopolitical fragmentation and digital innovation accelerate the shift towards local currencies and alternative payment networks, according to the ASEAN+3 Macroeconomic Research Office (AMRO).
Local currency settlement arrangements and digital payment platforms will assume a larger role in trade and supply-chain integration, AMRO said in a commentary on Wednesday.
It noted that events ranging from the tariffs imposed by the U.S. administration to conflict in the Middle East have driven the switches.
"When uncertainty originates elsewhere, investors seek safety in dollar-denominated assets. But when questions arise about the stability or predictability of U.S. policies and institutions, concerns inevitably emerge about the dollar's reliability as the anchor of the international monetary system," it said.
It sees that greater use of local currencies in intra-regional trade could further reduce currency mismatches and lessen Asian economies' exposure to U.S. monetary policy. ■
