Gita Gopinath highlights how the US fixation on tariffs and deficits is eroding the dollar’s anchor status (“America risks financial credibility with payments deficit obsession”, Opinion, March 12). Yet the deeper fracture is visible in two parallel developments: the petrodollar’s unravelling amid the Iran conflict and gold’s dizzying surge past $5,000 an ounce.
Bretton Woods once tied the dollar to gold at $35 an ounce. The so-called Nixon shock of 1971 when President Richard Nixon announced his “new economic policy”, a programme “to create a new prosperity without war”, replaced the dollar anchor with oil.
Today, Iran’s defiance — selling oil in yuan, rupees and even barter — along with Saudi Arabia’s quiet diversification, is dismantling that system. The 2026 war has accelerated this shift: oil-rich states now hedge against US sanctions and regime change risks, exactly as Gopinath fears for the broader US net international investment position (NIIP) which has deteriorated sharply to a negative 50 per cent of GDP.
Gold’s record run is no coincidence. It reflects investors fleeing a dollar whose credibility is fraying under erratic policy and persistent trade deficits. When the world’s reserve currency must be defended by tariffs rather than trust, de-dollarisation accelerates. Europe, China and the global south are already exploring alternatives, while Brics nations (Brazil, Russia, India, China and South Africa) quietly build non-dollar payment channels.
The lesson is clear — the dollar’s supremacy was never guaranteed. It was earned through stability. Washington’s current path risks turning today’s privilege into tomorrow’s liability.
Vijai Kirthi
Mandya, Karnataka, India
