Weakness cannot pass unnoticed in the cruel world of finances. Once market leaders become feeble, their rivals rush to replace them. It refers to both people and currencies. Thus, the latest trend to de-dollarization prompted other major currencies to strengthen their positions.
Currently, two currencies compete for the central stage. They are the euro, which is considered to be a real alternative to the US dollar amid Trump’s protectionism, and the yuan, the national currency of the second biggest economy. At first sight, the euro seems to be a leader in this competition, but some experts predict that the Chinese currency has all chances to take the first place. They argue that the United States and the European Union are allies and trading partners, so Washington has leverage over the currency bloc. As for the Chinese currency, it is not influenced by any political factors. Nonetheless, de-dollarization is not a fast process; it can take several dozens of years.
Currently, the American currency accounts for 63% of the global currency reserves. The euro with 20% is the second in the list, while the Japanese yen makes the top three with 5%. So, the greenback remains the most popular currency thanks to its stability, backed by buoyant US economy, transparency of the national financial market, and credibility of the monetary policy. The last two features will never apply to China, as its government blatantly manipulates the exchange rate of the national currency, so it is unlikely to earn trust. The point is that the US dollar is losing power on the back of the current US policy.
