The dollar is still king, but the alternatives are slowly gathering pace

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I’ve always taken a rather sceptical line in the debate about the future of the US dollar as the effective global reserve currency.

I can see how the prospect of the greenback losing that status might excite some politically motivated parties keen to spin the narrative about the end of American power in the world.

I can also see how it makes some logical economic sense in view of the declining proportion of global GDP coming out of the US, as well as the destabilising effect of that country’s growing national debt.

But, with the US dollar still accounting for 58 percent of all foreign exchange reserves, 54 percent of all export financing, and 88 percent of transactions in global forex markets (figures from Atlantic Council) the greenback is still globally dominant.

It will certainly be a long time until the dollar gets replaced by an alternative such as the fundamentally unstable euro or the Chinese government plaything, the yuan.

Talk of a basket of BRICS currencies – the five Rs of renminbi, ruble, rupee, rand and real – replacing the dollar is, for the time being at least, risible.

But if it does happen, I’m sure the UAE will be the place it happens first, notwithstanding the dirham-dollar peg.

Just in the past couple of weeks, there has been evidence of the creeping acceptance of dollar alternatives.

Last month Dubai Duty Free announced that in future it was going to accept Russian rubles at its outlets at DXB, and this week the hypermarket chain Lulu said it would allow visitors from India to pay for big ticket items such as mobile phones and electronics in rupees via the United Payments Interface app.

This slow, gradual acceptance of other currencies in everyday transactions is a bigger long-term threat to the dollar than any cataclysmic event in world financial or commodity markets.

My summer Mercedes fun is over 

One of the great delights for me of the summer months in Dubai is that I get to swank around the city in a Mercedes G63 – the “G Wagon” beloved of sheikhs in the UAE and macho drivers everywhere.

A little backstory: a couple of years ago my wife decided to splash a windfall on one of these elite cars. She has always loved them, and the admiring looks they attract in Dubai’s blingy night-time venues.

Not that it was my call, but I was unsure about the car. I didn’t like the boxy shape, nor did I like the mind-boggling price tag. (I won’t disclose specifically, but you can get an idea online).

She was very protective of her new toy and would rarely let me drive it. Instead, I was relegated to the rented Yaris we use for everyday driving, like school drop and supermarket shop.

In summer months, with no school, the Yaris goes back to the rental shop, leaving me no option but the throaty roar of the V8 turbo engine and its breathtaking acceleration. I’ve got quite used to the VIP valet in Mall of the Emirates, which seems the only place to park on the Carrefour trip.

It will all be over soon, though, and I’ll be back in the Yaris.

Where we went this summer 

Most conversations at this time of year in Dubai begin with “So, did you manage to get away from the heat?”

I’ve been taking note of the responses from friends and contacts for my own customised survey of expat holiday destinations, and can report as follows …

Thailand was very popular, it seems, both for family-friendly beach holidays and for the more culturally minded, with one friend highlighting the many temples he had visited in and around Bangkok.

Europe, of course, was as irresistible as ever, with London leading the poll in specific mentions, but Lisbon seems to have had a burst of popularity, and friends eulogised the attractions of the Portuguese capital.

Several Arab friends were doing the time-honoured pilgrimage to Marbella in Spain followed by London, again for the culture.

The US has also been a popular destination this summer. New York, of course, but it was good to see the flyover states get some attention too. Judging by his messages, one pal seemed to do a complete tour of the Deep South and Mississippi river. I was jealous.

Listening to all of this, my 10 rainy days in London in July and a long weekend in Azerbaijan (a business trip) seemed somehow inadequate.

So, on the spur of the moment yesterday I seized a window of opportunity and booked a flight to Los Angeles next week to see my grandchildren. California, here I come.

Frank Kane is Editor-at-Large of AGBI and an award-winning business journalist. He acts as a consultant to the Ministry of Energy of Saudi Arabia and is a media adviser to First Abu Dhabi Bank of the UAE