Janet Yellen hits back at de-dollarization after Brazil and South Africa challenge the greenback's dominance

Treasury Secretary Janet Yellen.

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• Janet Yellen has defended the US dollar's crucial role in international trade.
• The US Treasury chief backed the greenback after Brazil and South Africa's leaders questioned its dominance.
• China, Russia, and several other countries are looking at mounting challenges to the buck.

Treasury Secretary Janet Yellen has defended the dollar's crucial role in international trade after the leaders of both Brazil and South Africa questioned its dominance.

The presidents of the two countries appeared on a panel together at a conference in Paris on Friday. South Africa's Cyril Ramaphosa said that currencies would be "on the agenda" when the BRICS group meets later this year.

In a press conference close to the finance summit, Yellen hit back against the de-dollarization movement by highlighting the reasons why the US currency has come to dominate trade.

"There is a very good reason why the dollar is used widely in trade, and that's because we have deep, liquid, open capital markets, rule of law and long and deep financial instruments," she said, according to the Financial Times.

Yellen's defense of the dollar comes at a time when several rival countries – spearheaded by China and Russia – are bidding to dethrone the buck in an effort to chip away at the US's economic power.

Beijing called for suppliers in the Middle East to trade using the yuan rather than the dollar in December, and has ramped up its purchases of gold for seven months in a row to diversify its reserves.

Meanwhile, Russia has switched to using the renminbi as one of its main reserves, with president Vladimir Putin forbidding "unfriendly" countries from settling natural gas contracts in any currency other than the ruble.

The BRICS countries – Brazil, Russia, India, China, and South Africa – have also repeatedly pledged to launch a new reserve currency that they hope could unseat the greenback.

In Paris on Friday, Ramaphosa appeared to back those calls after Brazil's president, Luiz Inácio Lula da Silva, warned the dollar's dominance could have an adverse effect on poorer countries.

"Why can't we trade in our own currencies?" Lula asked of Brazil's dealings with Argentina and China, per the FT.

Read more: What is de-dollarization? Here's everything you need to know about rival countries' efforts to dethrone the greenback

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