U.S. Economic Pressure Still on Center Stage

The US Dollar Being Replaced?

Freedom Financial Archive | Originally posted April 27, 2023

Dear Reader,

Today we’re going to talk about the US dollar, and whether it’s losing its luster internationally as some have predicted. We have some new data that’s very interesting.

Big Picture:

There’s been talk about the US dollar being replaced on the global scale by the Chinese and the renminbi. In 2010, there was the fewest amount of US dollar transactions worldwide since 1992. However, since 2010, USD international transactions have gone up, not down. In fact, in 2022, 89% of international transactions were made using US dollars. Realistically, the dollar is going to remain dominant as long as the US military continues to control the seas.

What it Means for You:

The dollar is not losing its place. In the Americas, which includes Latin America, 98% of export invoicing is in dollars. 75% of all trades in the Asia-Pacific region is denominated in dollars. When you look at reserve currencies, from 2020-2022, the amount of dollars held in reserve has increased. And it’s been fairly stable since 2008. None of this resembles the dollar losing its luster, as some have predicted.

What to Watch For:

Keep an eye on the Chinese renminbi. Although I have zero concern that it’s going to overtake the dollar, it is starting to creep into foreign exchange reserves. But it’s not to the detriment of the dollar, it’s to the detriment of the yen. Also, keep an eye on the euro. In 2007, the euro was 37% of all transactions, as of 2022, it was 31%. It’ll be interesting to see if that drop continues.

Kind regards,

Freedom Financial News