2023-05-26 12:35:00
Dollar and yuan
dollar
The agency identifies 3 factors threatening the dollar’s global dominance
The global credit rating agency “Moody’s” reassured holders of the US dollar all over the world, along with holders of the various currencies linked to it, that this green currency will remain dominant globally during the coming period, despite the challenges facing the dollar and the US economy and the controversy in economic circles. .
Moody’s concluded that “the US currency is likely to maintain its position at the top of all currencies in the world, despite all the challenges.”
“We expect the emergence of a multipolar currency system over the next few decades, but the dollar will lead it because its competitors will struggle to fully replicate its scope, safety and convertibility,” Moody’s analysts wrote in a note on Thursday published by Western media, whose content was seen by Al Arabiya.net.
This does not mean that the global rating agency does not see any risks in the short term, as Moody’s said that the US trend towards protectionism, weakening institutions and the risk of default would threaten the dollar’s global dominance.
The report stated that “the greatest danger in the near term to the dollar’s position stems from the risks of policy mistakes that undermine confidence by the US authorities themselves, such as the US default on its debts, for example, and the weakening of institutions and the political axis of protectionism that threaten the global role of the dollar.”
Moody’s believes that even if a default on US government debt is backed quickly, it would “permanently” damage US Treasury holdings as risk-free assets.
The debt ceiling crisis has jittered global financial markets, with US officials indicating on Thursday that they have made some progress but no deal has yet been reached as the point at which the Treasury will run out of cash continues to approach.
Tensions over US debt negotiations escalated following ratings agency Fitch warned that the AAA rating was under threat due to a political standoff preventing an agreement.
“Although we expect politicians to eventually agree to raise or suspend the debt limit and avoid default on government debt, the greater polarization in the domestic political environment over the past decade has weakened the predictability and effectiveness of policy-making,” Moody’s report said. “Sanctions that prevent the free flow of dollars in global trade and finance might encourage further diversification,” the report added.
Moody’s concluded that US dollar liquidity, safety and low transaction costs will ensure the continued dominance of the dollar in international trade and finance, noting also that there are no viable alternatives. The report said that central banks reduced the share of dollar holdings to 58% instead of 71% in 2000.
Read also
1685156371
#dollar #maintain #global #dominance
