Dollar under fire from rival countries and currencies

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Although not yet, there are growing concerns about the US dollar’s supremacy in international trade and finance, Market Watch is reporting.

The US dollar’s rapid unwinding of its impressive rally last year, coupled with efforts in Beijing and elsewhere to reduce reliance on the dollar, has rekindled discussions about the potential twilight of the greenback’s dominance.

Discussions surrounding “de-dollarization” have intensified, and even Wall Street analysts have weighed in on the matter by publishing research reports that forecast increased competition for the dollar in trade and global reserves.

They have also provided assessments of where the dollar is likely to go in the coming months and how the adoption of central-bank digital currencies could shake up the current system.

Despite these concerns, many currency strategists and economists have pushed back against the idea that the dollar is in danger of losing its reserve status.

They have pointed out the dollar’s dominance in global trade and its widespread use as a reserve asset by central banks.

The dollar’s sharp appreciation last year caught many currency strategists off guard, as has its reversal over the last six months.

According to FactSet, the ICE U.S. Dollar Index DXY, which measures the currency against a basket of six competitors, has decreased by over 10% after reaching its highest point in more than twenty years in late September.

Last Thursday, the dollar hit its lowest level against the euro EURUSD in over a year, with the euro trading at approximately $1.10, as reported by Market Watch.

As a consequence, Rabobank’s team of analysts has identified the dollar as the poorest performing G-10 currency in the last month.

Written by staff