Why the dollar is losing ground faster in the world


The dominance of the American currency reflects the magnitude of the global leadership of the United States on the planet. Therefore, it is necessary to find out the reasons why the dollar, which has the status of the world reserve currency, is losing its positions more and more, writes the British magazine The Economist.


In July 2020, the largest depreciation of the dollar against important currencies in the last 10 years occurred - by 4%. At the same time, the positions of the euro, gold and cryptocurrencies have strengthened, which indicates an increase in confidence in them.

The entire first half of 2020 was marked by fluctuations in the markets. At first, this was influenced by the COVID-19 pandemic, and later the riots in the United States were added to this, which provoked a corresponding reaction from investors. At the same time, the growth of public debt and uncertain recovery economics The US is not encouraging.

Many economists are inclined to believe that the global hegemon may have to pay his bills. However, even if the question of dollar dominance is raised, it will not mean that the US has become less powerful. Therefore, it is more correct to say that the world order created by Washington is becoming more and more vulnerable.

Now the US share in global production and international trade is declining. Washington has long ceased to be a net creditor to others. At the same time, Beijing has become the world's leading exporter. That is why there was talk that the euro and yuan will replace the dollar in the foreseeable future.

Prior to that, in the history of mankind there was only one case of a change in the world reserve currency, when the dollar took the place of the pound sterling. Therefore, it is difficult to determine all the nuances of such a process. It should also be borne in mind that not only the economic power of the United States allowed the dollar to receive this status. The indisputable military power of Washington played an important role. But the status of the reserve currency is definitely not impregnable.

However, over the past decades, applicants have failed to get the dollar off its pedestal. The point is that troubled Europe and authoritarian China have their own problems. And the status of the dollar does not depend solely on export opportunities and US creditworthiness. The biggest threat to the dollar does not come from the euro or the yuan, but from the weakening of US commitments to alliances and institutions that have helped preserve peace and globalization for more than 70 years.

The US can rebuild global trade that will ensure the dollar's dominance for years to come. If they don't, then a hostile world could end the privileged position of the American currency and much more.
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  1. _AMUHb_ Offline
    _AMUHb_ (_AMUHb_) 16 August 2020 16: 59
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    I remember that the unlucky neighbor in the dacha decided to get to the bottom ("to the truth") and began to dig the root of the "hated" loach, dug a meter and a half into the depths, until he gave up this venture. It should be noted that I never got to the bottom (not so stubborn)))) This topic is somewhat similar.
    1. Vladimir Tuzakov (Vladimir Tuzakov) 17 August 2020 12: 34
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      Do you see the groundhog? - Not. - And he is ...

      I will add: and it will come out at an unexpected time ... The dollar has accumulated so many obligations over a century (printed) that it is time for the households to nullify these obligations, which is being done. Confirmation of this is the emission of a trillion dollars at zero rates in the quarter of the year. Who can survive, no one ... !!! It seems that the Fed turns everyone into suckers in front of everyone's eyes ...
  2. Alexzn Offline
    Alexzn (Alexander) 16 August 2020 17: 50
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    As usual - about nothing.
    1. 123 Online
      123 (123) 16 August 2020 19: 23
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      As usual - about nothing.

      Not certainly in that way. It's just that the article is incomplete, you can read it on "Inosmi.ru" without translation, there is a little more detail. The reasoning of the British on this topic, the comparison with the fall of the pound is still of interest. They describe the reasons, look for patterns of similar processes.
  3. Alexzn Offline
    Alexzn (Alexander) 16 August 2020 19: 27
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    Quote: 123
    As usual - about nothing.

    Not certainly in that way. It's just that the article is incomplete, you can read it on "Inosmi.ru" without translation, there is a little more detail. The reasoning of the British on this topic, the comparison with the fall of the pound is still of interest. They describe the reasons, look for patterns of similar processes.

    This is a natural process. The global economy wants a global, supranational currency. While this is not possible, it means that there will be several backups. Thank you, I'll read it.
  4. Sergey Latyshev (Serge) 16 August 2020 22: 06
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    USD 72,88. And revisit the brief history of the dollar.
    1. 123 Online
      123 (123) 17 August 2020 11: 30
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      USD 72,88. And revisit the brief history of the dollar.

      AND....? What does it mean? What does this mean? For example, JPY 106,5. You can see their brief history. Or their CNY 6,94, EUR 0,84, GBP 0,76.
    2. Satellite Offline
      Satellite (Satellite) 18 August 2020 01: 25
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      USD 72,88. And revisit the brief history of the dollar.

      To operate on exchange rates, it would be nice to also include "mosk" and compare them by PPP.
      And the teaching staff is very visual. Here's an example that is close to your understanding:
      Vodka Smirnoff Black No. 55
      - USA - $ 17
      - Russia - 420 Rubles (420r: 72,88) = 5,76 $
      The question disappeared?
  5. Sergey Kosov Offline
    Sergey Kosov (Sergey Kosov) 18 August 2020 04: 55
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    The world's reserve currency is gold. Everything else is candy wrappers, which you can print as much as you like, which is what the so-called. "developed countries" - for the sake of their own material well-being - and to the detriment of the rest of the world. When the world moves to the gold standard, the dominance of the West on the planet will come to an end.