The year 2022 was, in a way, the turning point in economic thinking in most countries. The concept of de-dollarisation caught on. The Ukraine war triggered this move which was probably brewing for quite some time. But once Russia was kept out of SWIFT (the international payments system managed by USA) and their dollar assets impounded by the USA, the feeling was that the dollar was no longer a safe haven asset. There was need for the world to move away from the dollar. Even central banks all over the world are trying to increase their holdings of gold as part of the process of diversification of forex reserves. It did however turn out to be what Shakespeare would have said, “full of sound and fury” because the world remains dollarised even today.

In fact the US hegemony in the market can be savoured by the importance placed by the whole world on the Federal Reserve. The Fed has become the anchor for the entire ecosystem of central banks; and while the stance is that decisions taken are based on domestic conditions, one cannot ignore what the Fed does. If one is in the market, one can see that every statement made by any of the officials of the Fed have far-reaching consequences on bond yields. When they express a simple view on the timing of a possible Fed action which involves cutting rates in future, hiccups can be felt in the market when the direction indicated is not downwards. In fact, everything that can influence the Fed has an impact on how the........

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