National governments and central banks continue to peg their currencies to the US dollar to secure exchange-rate stability and reserve benefits [1].
This financial reliance highlights the global imbalance of power, as the dollar's status as the dominant reserve currency allows the U.S. to influence international trade and monetary policy. For emerging economies, the peg serves as a tool to anchor inflation expectations and reduce volatility [1].
John Smith, a Marketplace reporter, said the dollar dominates the global financial system, making up over half of the foreign reserves held by central banks [1]. Specifically, the dollar accounts for over 50% of these global reserves [1].
While some nations seek stability through the dollar, India has faced internal struggles with its industrial output. The country's nominal GDP grew from Rs 189 lakh crore in 2018-19 to Rs 346 lakh crore in 2025-26, representing approximately nine% annual growth in rupee terms [2]. Despite this growth, Indian factories have struggled with low output and a lack of competitiveness throughout the 2024-2026 period [2].
The Times of India editorial team said India's factories have been hampered by the Licence Raj, stringent labour laws, and regulatory bottlenecks [2]. These restrictive laws and legacy policies have increased costs for factory owners and limited operational flexibility [2].
This intersection of global currency power and domestic industrial failure has sparked political debate in India. Nishikant Dubey, a Lok Sabha MP, said Congress should answer why they tied India's fate to the dollar [3].
Critics argue that the combination of a dollar-dependent financial system and rigid internal regulations has prevented the nation from meeting its broader economic targets [2].
“The dollar dominates the global financial system, making up over half of the foreign reserves held by central banks.”
The continued global reliance on the US dollar provides a safety net for some emerging markets but creates a vulnerability to U.S. monetary shifts. In India, the struggle to modernize manufacturing suggests that macroeconomic growth in GDP is not translating into industrial efficiency due to deep-seated regulatory hurdles and outdated labor frameworks.
