While concerns about the U.S. fiscal outlook and Washington’s persistent use of economic sanctions could motivate some countries to look for alternatives to the dollar, the currency remains strong.
The dollar is the dominant reserve currency and its status is likely to endure, in part, because even the most talked-about alternative, the yuan, is not a credible rival, he said. Morgan Stanley in a report published this Thursday.
Analysts consider that the rivalry with China, Russia’s war in Ukrainedisputes in Washington over the US debt ceiling and rising debt levels have put the dollar’s status as the world’s dominant currency under scrutiny in recent years.
AND Morgan Stanley He indicated that he hopes that the dominance of the currency will not change soon, but notes that the influence of the greenback on the global economy through a series of economic and financial indicators remains strong.
How the dollar is projected in the world
The concern for US fiscal outlook and Washington’s persistent use of economic sanctions could motivate some countries to look for alternatives to the dollarbut it’s a tall order, Morgan Stanley said.
“The most discussed competitor is China and we do expect a modestly more global role for the CNY” (the Chinese currency), said Morgan Stanley, referring to the yuan.
“However, we believe that the China’s ‘3D challenge’ of debt, deflation and demographics will limit CNY’s international appeal“he added, estimating that foreign exchange reserves in yuan should rise to just 5% in 2030 from 2.3% today.
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Morgan Stanley said that some periods of dollar weakness are to be expectedwhile the proximity of the presidential elections in the United States could test the status of the dollar.
According to Morgan Stanleythe World currency reserves exceed US$12 trillionworld trade is around US$35 trillion and cross-border bank loans exceed US$38 trillion.
Source: Ambito
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