Recent events in Afghanistan may pose a threat to the US dollar. Chief economist at Goldman Sachs and former UK Treasury minister Jim O’Neill thinks that the Taliban’s takeover of Afghanistan may shatter the dominance of the US currency. Discussing the influence of the “Afghan factor” on the greenback’s leadership, the economist noted that current events in the Middle East had already undermined the stability and supremacy of the world’s most popular currency. Drawing an analogy with the past, Jim O’Neill recalled that “the greenback weathered the fall of Saigon in 1975 and the debacle in Iraq following the US invasion in 2003.” Back then, the countries that had enough strength to influence the global monetary system, such as Japan, Germany, and China, made a conscious decision not to allow their currencies to float freely against the dollar. Another factor to weigh on USD is its prolonged depreciation and massive cash injections into the US economy provided by the Fed during the pandemic. According to Jim O’Neill, the tendency of strong economic growth is gradually shifting towards Asia, with China being a leader here. He added that “the IMF will be working on its mandated five-year review of the composition and valuation of the SDR basket.” An increase in the share allocated to the yuan will be taken as a sign that the world’s currency system is slowly but undoubtedly changing. However, his opponents are sure that the only risks the US faced after its failure in Afghanistan are connected with the country's global image rather than with economic threats. Therefore, this situation is unlikely to have any significant influence on the US dollar.
