Latest news with #reserveCurrency
The National
08-07-2025
- Business
- The National
US dollar will remain king, Trump says
President Donald Trump on Tuesday said the US dollar will retain its status as the world's reserve currency despite its decline this year. The US dollar, to which most Gulf currencies are pegged, has been the world's reserve currency for decades. Recent data from the International Monetary Fund showed that the share of US dollar holdings in foreign allocated reserves was at 57.80 per cent in the fourth quarter last year. The portion of global payments involving the dollar also passed 50 per cent at the start of this year, according to Swift. 'If we lost the standard … that would be like losing a war, a major world war. We would not be the same country any longer. We're not going to let that happen,' Mr Trump told reporters during a Cabinet meeting at the White House. Mr Trump made the comments after being asked about a previous remark on social media in which he threatened to issue an additional 10 per cent tariff on any country that aligns itself 'with the anti-American policies of Brics". Brics is an intergovernmental organisation comprising emerging market countries that have experienced significant economic growth and play a major role in the world economy. It is named after its founding members – Brazil, Russia, India, China and South Africa. Mr Trump, who maintained the 'the US dollar is king', said others can challenge the currency's status, 'but they're going to have to pay a big price'. 'And I don't think any of them are willing to pay that price,' he said. Mr Trump also repeated his threat to issue additional tariffs on Brics countries. The value of the US dollar has dropped more than 10 per cent this year, its worst sixth-month stretch at the beginning of the year in more than five decades. The dollar's dip comes as Mr Trump has shaken investor confidence with his shifting trade policies, notably through tariffs. Mr Trump this week began sending out so-called trade letters to countries informing them what the US will charge on imports if a deal is not struck by August 1. Mr Trump has also frequently attacked Federal Reserve chairman Jerome Powell for not lowering interest rates, threatening the central bank's independence that underpins confidence in financial markets. Mr Trump on Tuesday again called for Mr Powell's resignation. Mr Powell has maintained he will serve out the remainder of his term which expires next year. And the passage of the One Big Beautiful Bill last week will add trillions of new dollars to the US debt, which has already grown to more than $36 trillion. Foreign investors have responded by selling government bonds and US stocks. One survey from the Bank of America showed that 23 per cent of fund managers now prefer American stocks, compared to 54 per cent for international stocks. The US dollar index was trading 0.03 per cent higher on Tuesday.
Bloomberg
07-07-2025
- Business
- Bloomberg
Is the Dollar Resting, or Nailed to Its Perch?
To get John Authers' newsletter delivered directly to your inbox, sign up here. John Cleese's dead parrot famously wouldn't voom if you put 4,000 volts through it. Similarly, the dollar at present won't voom, even with a jolt of startlingly positive economic data. The question for the second half of this year is whether it's merely resting, or sticking to its perch only because it has been nailed there (by the exorbitant privilege which comes with being the world's reserve currency). The trend is startlingly negative, with the DXY dollar index now further below its own 200-day moving average than at any time in 20 years:
Reuters
01-07-2025
- Business
- Reuters
Challenge to dollar supremacy a long way off, central bankers say
SINTRA, Portugal, July 1 (Reuters) - There is no prospect of a major challenge to the dollar's status as the world's reserve currency of choice any time soon, central bankers gathered for an annual conference in the Portuguese resort of Sintra said on Tuesday. U.S. President Donald Trump's unpredictable economic, trade and security policies have spurred questions over whether the U.S. currency, which accounts for 58% of the world's reserves, can remain at the centre of the global monetary system. European Central Bank President Christine Lagarde, who has argued the euro could over time become an alternative to the dollar if Europe's currency zone enacted necessary reforms, said 2025 could in future be viewed as "pivotal" in this respect. "(But) for a major change to occur it will take a lot of time and a lot of effort," she told a panel with her U.S., British, Japanese and Korean counterparts. She noted that "investors are looking at options" in a climate characterised by uncertainty and unpredictability and that there was evidence that the euro was benefiting from that. "It's not going to happen just like that overnight. It never did historically," she said. "But there is clearly something that has been broken. Whether it is fixable, or whether it is going to continue to be broken - I think the jury's out." Bank of Japan Governor Kazuo Ueda also noted that any significant change would depend on structural reforms. "It's to a certain extent up to what areas like Europe or China will do in terms of improving the efficiency or convenience of their currencies," he said, citing as an example the efforts at capital market integration in the euro zone. Bank of England Governor Andrew Bailey said any change to the dollar's status was a long way off. "I don't see ... a sort of a major shift at the moment," he said, arguing that any reserve currency had to offer a supply of safe assets into the market that can be used for purposes of collateral and security. Bank of Korea Governor Rhee Chang-yong said the prospect of a long-term shift of the dollar sentiment was a subject of discussion for some even as they retained their dollar holdings. "It looks like people are talking about it. But at this moment they keep the dollar share while increasing their hedging ratio," he told the panel. Lagarde told a recent audience in Berlin that there was an opening for a "global euro moment", if it earned it. She said Europe would need to build a deeper, more liquid capital market, bolster its legal foundations and underpin its commitment to open trade with security capabilities. While the dollar's current share of international reserves is the lowest it has been in decades, its 58% tally is still well above the euro's 20% share.
Khaleej Times
01-07-2025
- Business
- Khaleej Times
Challenge to dollar supremacy a long way off, central bankers say
There is no prospect of a major challenge to the dollar's status as the world's reserve currency of choice any time soon, central bankers gathered for an annual conference in the Portuguese resort of Sintra said on Tuesday. US President Donald Trump's unpredictable economic, trade and security policies have spurred questions over whether the US currency, which accounts for 58% of the world's reserves, can remain at the centre of the global monetary system. European Central Bank President Christine Lagarde, who has argued the euro could over time become an alternative to the dollar if Europe's currency zone enacted necessary reforms, said 2025 could in future be viewed as "pivotal" in this respect. "(But) for a major change to occur it will take a lot of time and a lot of effort," she told a panel with her U.S., British, Japanese and Korean counterparts. She noted that "investors are looking at options" in a climate characterised by uncertainty and unpredictability and that there was evidence that the euro was benefiting from that. "It's not going to happen just like that overnight. It never did historically," she said. "But there is clearly something that has been broken. Whether it is fixable, or whether it is going to continue to be broken - I think the jury's out." Bank of Japan Governor Kazuo Ueda also noted that any significant change would depend on structural reforms. "It's to a certain extent up to what areas like Europe or China will do in terms of improving the efficiency or convenience of their currencies," he said, citing as an example the efforts at capital market integration in the euro zone. Bank of England Governor Andrew Bailey said any change to the dollar's status was a long way off. "I don't see ... a sort of a major shift at the moment," he said, arguing that any reserve currency had to offer a supply of safe assets into the market that can be used for purposes of collateral and security. Bank of Korea Governor Rhee Chang-yong said the prospect of a long-term shift of the dollar sentiment was a subject of discussion for some even as they retained their dollar holdings. "It looks like people are talking about it. But at this moment they keep the dollar share while increasing their hedging ratio," he told the panel. Lagarde told a recent audience in Berlin that there was an opening for a "global euro moment", if it earned it. She said Europe would need to build a deeper, more liquid capital market, bolster its legal foundations and underpin its commitment to open trade with security capabilities. While the dollar's current share of international reserves is the lowest it has been in decades, its 58% tally is still well above the euro's 20% share.
Yahoo
25-06-2025
- Business
- Yahoo
China Seizes Moment to Globalize Yuan as Dollar Doubts Mount
(Bloomberg) — China is launching a sweeping campaign to promote the yuan's global role, seizing what officials see as a rare strategic opening. Bezos Wedding Draws Protests, Soul-Searching Over Tourism in Venice US Renters Face Storm of Rising Costs US State Budget Wounds Intensify From Trump, DOGE Policy Shifts Commuters Are Caught in Johannesburg's Taxi Feuds as Transit Lags With the dollar (DX=F) facing multiple challenges, Beijing is accelerating its long-standing campaign to reduce global reliance on the world's reserve currency. What sets the latest push apart is timing: Chinese policymakers see erratic US decision-making and geopolitical tensions as the most favorable backdrop in years to promote the yuan. The latest measures aim to not just facilitate trade but also open China's financial markets and embed the yuan more deeply in investment flows. They include easing capital controls, expanding cross-border payment systems, and launching new financial products to attract foreign investors. Beijing's hope is that a more internationalized yuan may reshape trade and global finance and challenge the dollar's dominance in reserve portfolios. 'The measures to further integrate China with the global financial system feel like steps in the right direction, as China wants to make sure that the yuan is in the conversation of important global currencies,' Lynn Song, chief Greater China economist at ING Bank NV, said. Role in Monetary System In a speech last week, Chinese central bank governor Pan Gongsheng envisioned a new global currency order with a reduced role for the dollar. He outlined a vision in which China's financial markets are more open and the yuan plays a central role in the world's capital flows. To push that vision, the People's Bank of China plans to establish an international operation center for the digital yuan in Shanghai. It's also exploring the launch of the country's first domestic currency futures, which could compete with similar hedging tools in offshore markets like Singapore and Chicago. In Hong Kong, a fast payment system was launched over the past weekend. It allows residents to wire payments in the yuan or Hong Kong dollar to the mainland for trade and services, further integrating the two markets. The city's exchange is also expected to add yuan-denominated counters to the southbound stock link. Crypto-currency linkages are on the table as well. Hong Kong's Secretary for Financial Services and the Treasury Christopher Hui said recently he won't rule out the possibility of linking stablecoins with the yuan, though he noted risks, exchange rates, monetary policy and other factors would have to be considered. His comments came after the US Senate passed legislation on a dollar-pegged stablecoin and Hong Kong's approval of its own stablecoin regulatory framework in May. China is also taking steps to further facilitate capital flows by opening more domestic trading products to foreign investors later this year. Authorities plan to raise quotas for local residents to invest their yuan in overseas securities, which would increase the currency's international circulation. 'China could be seizing the opportunity to promote RMB internationalization,' Xiaojia Zhi, an economist at Credit Agricole CIB said, adding further steps, such as deepening the offshore yuan liquidity pool, could sustain the momentum. China's own payment system, CIPS, is also gaining traction. It expanded recently to cover more foreign banks including United Overseas Bank, Bangkok Bank and First Abu Dhabi Bank. For the first time, CIPS' overseas participants cover offshore yuan centers in Africa, the Middle East, Central Asia and Singapore. These are set to increase yuan settlements in China's cross-border transactions, where the currency has already overtaken the dollar in recent years. While the Chinese currency still accounts for just 2.2% of global reserves, its share in China's cross-border transactions has already overtaken the dollar. In the nation's goods trade, yuan settlement stood at 26% in May and could rise to 40% by year-end, according to Zhaopeng Xing, senior strategist at Australia & New Zealand Banking Group. Economic Headwinds Still, China faces challenges. An economic slowdown, deflationary pressures and lower bond yields have complicated efforts to push the yuan forward. 'On the fundamental level, wider international use of yuan rests on a robust economy and further progress in capital account convertibility,' Morgan Stanley economists led by Robin Xing wrote in a note last week. Inside Gap's Last-Ditch, Tariff-Addled Turnaround Push Luxury Counterfeiters Keep Outsmarting the Makers of $10,000 Handbags Ken Griffin on Trump, Harvard and Why Novice Investors Won't Beat the Pros Is Mark Cuban the Loudmouth Billionaire that Democrats Need for 2028? Can 'MAMUWT' Be to Musk What 'TACO' Is to Trump? ©2025 Bloomberg L.P. Sign in to access your portfolio
