Against the Tide: Slow burn for the dollar

Big overseas holders of US dollar assets, with China at the forefront, will not be sold another pup. Instead of supporting wayward US financial policies they will increasingly diversify to other currencies.

The US dollar is going to resume its secular decline. Its role as the world’s dominant reserve currency will come under renewed threat over the next decade as export-surplus economies look to diversify their dollar reserves into other currencies.

This will not happen suddenly and there might be upward corrections for the dollar, particularly if markets are disappointed with the failure to achieve a V-shaped global economic recovery and there is a rush back to safe-haven assets.

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