China has been cherishing ambitions to dethrone the US dollar. Alas, all efforts have been in vain. The greenback remains the world’s number one reserve currency, tightening its grip across the board.
According to Jim Rogers, a major American investor, replacing the universally recognized US dollar with an inconvertible yuan is now out of the question. For the time being, the renminbi cannot be a full-fledged replacement for the greenback as the world’s main currency. The insuperable obstacle is that the yuan is not convertible, Jim Rogers explained.
Nevertheless, Beijing is pushing ahead with the worldwide acceptance of its currency. However, at present, the Chinese currency is not able to compete with the king US dollar. At the same time, Jim Rogers recommends that it makes sense to add the yuan to investment portfolios.
The renminbi is not convertible because there are two types of the yuan: offshore and onshore. The first one is used for trading in Hong Kong, Malaysia, Singapore, and other Asian jurisdictions. As for the second, its forex rate is set by China’s monetary authorities. Beijing is trying to prevent the two currencies from diverging by more than 2%.
No currency has yet managed to surpass the US dollar in terms of reliability, convertibility, and demand, the investor acknowledged. Indeed, there is no alternative means of payment that suggests higher utility. The reliability of the US dollar is not hampered even by the fundamental woes that the greenback is currently facing.
The expert highlights the snowballing US national debt among the threats to the US currency. Jim Rogers is very bullish about the US dollar which investors always actively buy in case of global headwinds.
Besides, the US dollar is disturbed by the fact that it is no longer treated as absolutely neutral when any owner of the bucks can use the currency for any purpose, the investor underscored its vulnerability.
